CBN orders banks to trade freely as naira exchanges at N755/$

The Central Bank of Nigeria (CBN) has directed commercial banks in the country to sell forex freely at market-determined rates after the naira exchanged at N750-N755 to the dollar at the Investors and Exporters window.

This was contained in a statement issued by the Director, CBN Financial Markets Department, Angela Sere-Ejembi, on Wednesday, June 14, 2023.

It was gathered that the market rate was a “willing buyer, willing seller” arrangement.

This shows that Nigeria has eased its control of the naira, allowing the local currency to freely float.

The statement read: “Abolishment of segmentation. All segments 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.

“Re-introduction of the ‘Willing Buyer, Willing Seller’ model at the I&E Window. 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 9am to 4pm, Nigeria time.”

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

The latest development is coming a few days after President Bola Tinubu suspended Godwin Emefiele as CBN Governor over the ongoing investigation of his office and the planned reforms in the financial sector of the economy.

Emefiele was directed to hand over the affairs of his office to the Deputy Governor (Operations Directorate), who will act as the Central Bank Governor pending the conclusion of the investigation and the reforms.

The suspended CBN Governor was later arrested by the Department of State Services (DSS).

The Star