The Central Bank of Nigeria (CBN) yesterday signals what seems to be the end of the multiple official foreign exchange rate windows as it stopped the publication of the fixed Naira exchange rate on its website and instead says ‘The Naira Exchange Rate is market determined’.
The CBN website is usually updated with the Inflation Rate, Naira Exchange Rate to USD, Monetary Policy Rate and the Crude oil price in USD but the Naira Exchange Rate to USD was removed on Tuesday and replaced with ‘the Naira Exchange Rate is market determined’
The CBN multiple exchange windows includes: The official window, Inter-bank forex window, The Bureau De Change (BDC), Investors and importers forex window, Small and Medium Enterprises (SMEs) window, Window for the payment of Invisibles (Medical bills, school fees and foreign loan repayments) Business travel allowance and the Personal travel allowance windows
The official rate which use to be around N306/USD but trades at the rate of about N360/USD for Investors and exporters FX window and the BDC/ parallel market windows and others.
The latest move by the CBN, according to analyst will allow the Naira to weaken past its official rates as the multiple exchange rate regime is being unwind.
Governor of the Central Bank, Godwin Emefiele, who just had his second 5 year second term in office renewed by the government was initially quoted as saying “the foreign exchange has substantially converged at N360 per dollar at the Nigerian Autonomous Foreign Exchange (NAFEX) window and Bureau De Change segment of the market.
According to Bloomberg “A move toward a market determined exchange rate will be welcomed by investors who have long accused the government of some level of capital control and bemoaned the system of multiple exchange rates”