CBN announces unification of FX windows, abolishes Naira4Dollar scheme
The Nigerian Central Bank (CBN) has declared the unification of all segments of the Nigerian foreign exchange market.
In a statement released on Wednesday, the central bank announced the closure of all Investors & Exporters (I&E) windows.
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This action is part of the Nigerian government’s efforts to improve market liquidity and stability and attract foreign investment to the country’s economy.
From 30 June 2023, the central bank also discontinued the RT200 programme and the naira4dollar remittance scheme.
It was stated that these programmes, which incentivized remittances and encouraged the influx of foreign currency, would no longer be implemented.
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According to a press release signed by Angela Sere-Ejembi, Director of Financial Markets, the bank eliminated the segmentation of the FX market into different windows.
“From now on, all transactions will occur through the Investors and Exporters (I&E) window, where the exchange rate will be determined by market forces. It was stated that applications for medical expenses, school fees, BTA/PTA, and SMEs would continue to be processed by deposit money banks.
Earlier on Wednesday that the Nigerian naira depreciated significantly against the US dollar at the Investors and Exporters window as the Central Bank of Nigeria (CBN) permitted the local currency to trade ‘freely’ in an effort to reset the nation’s monetary policy.
Reports indicated that the CBN instructed banks to remove the cap on the investors’ and exporters’ (I & E) window of the forex market to permit the naira exchange rate to float freely.
Additionally, the CBN announced the reinstatement of the “Willing Buyer, Willing Seller” model at the I&E window. This model enables eligible transactions to access foreign exchange in accordance with the rules outlined in the circular dated April 21, 2017.
Under this model, allowing market forces to determine exchange rates is expected to increase market transparency and promote equitable pricing.
Under the new framework, the operational rate for all government-related transactions will be calculated to two decimal places using the weighted average rate of the previous day’s executed transactions at the I&E window.
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