After years of adhering to a fixed peg, the Central Bank of Nigeria has officially taken a huge leap in floating the Naira. The move is the latest in a series of initiatives by the new administration to reconfigure the country’s economy in line with their objective of achieving a 6% annual GDP growth rate as announced by the President during his inauguration.
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After Godwin Emefiele’s removal, the Nigerian Stock Exchange soared to a 15-year high on the first trading day. According to analysts, the significant surge can be attributed to investors’ optimistic outlook regarding forthcoming monetary policy reforms, with particular emphasis on exchange rate management.
According to BusinessDay, customers have indicated that the Investors & Exporters (I&E) window is currently offering a currency exchange rate range of N750-N755/$ as per emails received from their banks. However, the Central Bank of Nigeria (CBN) has not yet updated the I&E rate on its website, which remains at N463/$. The last rate update was observed on June 9.
According to bankers cited by BusinessDay, the exchange rate has the potential to reach as high as N800 to N1000 by the end of today. These bankers suggest that the next step for the Central Bank of Nigeria (CBN) should be to prioritize the supply of dollars in order to support the float of the naira.
In an official release by the Central Bank of Nigeria tagged “Operational Changes to the Foreign Exchange Market“, it was noted that the bank was abolishing the segmentation of the foreign exchange market.
The release noted, “All segments are now collapsed into the Investors and Exporters (I&E) window. Applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks.”
Also Read: Naira Appreciates at I&E Window After Another CBN Intervention
The release noted the reintroduction of the “Willing Buyer, Willing Seller” model at the I&E window. The CBN also announced the cessation of the RT200 Rebate Scheme and the Naira4Dollar Remittance Scheme.
Following the announcement, the Dollar surged to a peak of N791/$ at the I&E Window. However, by the end of the trading session, it settled at a selling rate of N664/$ at the window.
