CBN announces unification of all segments of the Nigerian forex market

Central Bank of Nigeria (CBN) has made an announcement regarding the foreign exchange market in Nigeria.

They have decided to bring together all segments of the market into one window called the Investors & Exporters (I&E) window.

This move is aimed at improving the availability of money and stability in the market, as well as attracting foreign investors to the Nigerian economy.

The CBN has also decided to stop two programs called the RT200 program and the naira4dollar remittance scheme starting from June 30, 2023.

These programs were designed to encourage people to send money back to Nigeria and to increase the inflow of foreign currency, but they will no longer be in operation.

The bank has abolished the division of the foreign exchange market into different windows.

From now on, all transactions will be conducted through the Investors and Exporters (I&E) window, where the exchange rate will be determined by market forces.

However, certain transactions like medical expenses, school fees, travel allowances, and small and medium-sized enterprises will still be processed through regular banks.The CBN has also reintroduced a model called “Willing Buyer, Willing Seller” at the I&E window.

This model allows eligible transactions to access foreign exchange based on specific guidelines.

The goal is to promote transparency and fair pricing in the forex market by allowing market forces to determine exchange rates.Under the new framework, the operational rate for government-related transactions will be determined by the average rate of previous day’s transactions at the I&E window.

The CBN has also made changes to trading limits on oversold and overbought foreign exchange positions to provide more flexibility and prevent excessive accumulation.

To ensure transparency and smooth trading, the CBN has reintroduced order-based two-way quotes and implemented a Central Counter Party (CCP) to clear all forex transactions.

They have also defined the operational hours for forex trades from 9 am to 4 pm Nigeria time.These decisions by the CBN are in line with the government’s commitment to unify the different exchange rates in Nigeria and address concerns about the transparency of the country’s exchange rate system.

The government aims to boost the economy and achieve a GDP growth of at least 6%.