The Central Bank of Nigeria (CBN) has announced a major policy shift in the Nigerian forex market. The apex bank has unified all segments of the forex market into a single entity, the Investors and Exporters (I&E) window.
The I&E window is a market-determined exchange rate system where buyers and sellers of foreign exchange can trade freely. The CBN said that all transactions will now be done through this window, where the exchange rate will be determined by market forces.
The CBN also scrapped the Retail Secondary Market Intervention Sales (RT200) programme and the naira4dollar remittance scheme, which were introduced to boost liquidity and stability in the forex market. These programmes will cease to operate effective 30 June.
According to a press statement signed by Angela Sere-Ejembi, the Director of Financial Markets at the CBN, the unification of the forex market is part of the Nigerian government’s efforts to improve liquidity and stability in the market and attract foreign investors into the Nigerian economy.
The statement reads, “This follows weighty allegations of abuse of office levelled against him. “All transactions will now be done through the Investors and Exporters (I&E) window, where the exchange rate will be determined by market forces.
“Applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks,” it said.
Newsflash Nigeria reported earlier on Wednesday that Naira weakened significantly against the United States dollar at the I&E window as CBN allowed the local currency to trade ‘freely’ in an effort to reset the nation’s monetary policy.
Reports claimed that the CBN directed banks to remove the cap on the I&E window of the forex market to allow for the free float of the naira exchange rate.
The CBN said that this move is expected to enhance transparency, efficiency and price discovery in the forex market. It also said that it will continue to intervene in the forex market as and when necessary to maintain stability and support economic growth.
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