On Wednesday, the Nigerian naira demonstrated appreciation against the United States dollar on the Investor & Exporter (I&E) forex window, closing at 793.70 naira per dollar.
Just a week before, the local currency was trading at 825 naira per dollar on the same I&E window.
According to data from the FMDQ, the day’s trading began at 778.07 naira per dollar and reached a peak of 853 naira per dollar before settling at 793.70 naira per dollar at the close of trading.
The total turnover for the trading session amounted to $87.19 million.
At the parallel market, some Bureau de Change operators reported buying and selling the dollar at 820 naira and 825 naira, respectively.
In recent weeks, the Central Bank of Nigeria directed Deposit Money Banks to remove the rate cap on the naira at the I&E window, allowing the national currency to freely float against the dollar and other global currencies. This move aims to foster a more flexible exchange rate regime.
The banking regulator explained its new forex operation in its report on ‘Understanding the operational changes to the foreign exchange market’.
The Central Bank of Nigeria made a significant change in the foreign exchange (FX) market by consolidating all segments into the Investor & Exporter (I&E) window. This move implies that all eligible FX transactions in the market will now be conducted exclusively through the I&E window, rendering all other existing windows obsolete and no longer operational.
“The I&E market functions by a willing buyer, willing seller system, where an entity with demand for FX seeks out another entity with FX to sell at an agreed price through an authorised dealer,” the CBN stated.
On the concept of the willing buyer and willing seller model, it explained that the rates were mutually agreed by both parties.
The CBN said PTA, BTA and other invisible transactions would continue to be accessed through the banks at the prevailing market rate.
