CBN cancels multiple exchange rates, collapses all forex markets into I & E window

The Central Bank of Nigeria (CBN) has abolished segmentation in the foreign exchange (FX) market.

The apex bank also collapsed all FX market rates into the Investors and Exporters (I&E) window.

The CBN made this known in a statement signed by Angela Sere-Ejembi, director, financial markets department of the apex bank, on Wednesday, June 14.

The apex bank also collapsed all rates into the Investors and Exporters (I&E) window.

The CBN said that the move was part of a series of immediate changes to operations in the Nigerian FX market.

The statement partly reads, “All segments in tge FX market are now collapsed into the Investors and Exporters (I&E) window.

“Applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks.”

The apex bank also announced the re-introduction of the “Willing Buyer, Willing Seller” model at the I&E Window.

It said that, “Operations in this window shall be guided by the extant circular on the establishment of the window, dated 21 April 2017 and referenced FM/DIR/CIR/GEN/08/007.

“All eligible transactions are permitted to access foreign exchange at this window.

“The operational rate for all government-related transactions shall be the weighted average rate of the preceding day’s executed transactions at the I&E window, calculated to two (2) decimal places.

“Proscription of trading limits on oversold FX positions with permission to hedge short positions with OTC futures.

“Limits on overbought positions shall be zero.

“Re-introduction of order-based two-way quotes, with bid-ask spread of N1.

“All transactions shall be cleared by a Central Counter Party (CCP).

“Reintroduction of Order Book to ensure transparency of orders and seamless execution of trades.

“The operational hours of trades shall be from 9 am to 4 pm, Nigeria time.”

The CBN noted fhat further guidance on the operational changes would be communicated to authorised dealers and the general public in due course.

It is pertinent to note that the changes to operations in Nigeria’s FX market implies that the country has eased its control of the naira, allowing the local currency to freely float.

A free-floating exchange rate occurs when a government allows the exchange rate to be determined purely by market forces.

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