Following the suspension of Godwin Emefiele as the Governor of the Central Bank of Nigeria, an announcement has been made allowing commercial banks to engage in unrestricted foreign exchange trading at any rate.
There are indications that the Central Bank of Nigeria (CBN) has issued a directive to banks, allowing them to engage in foreign exchange trading within the Investors & Exporters (I&E) window at flexible exchange rates determined by willing buyers and sellers.
As a result, the exchange rate within the I&E window witnessed a significant surge, reaching N610 per dollar as of 12:50 pm, a notable increase from the previous rate of N471.67 recorded yesterday night.
While an official statement from the Central Bank of Nigeria (CBN) regarding the directive has not been released, two banking executives have reportedly confirmed that the CBN did indeed provide the directive to the banks. Despite the absence of an official statement, the confirmation from these banking executives lends credibility to the information.
According to Nnamdi Nwizu, an investment banker and co-founder of Comercio Partners, the directive from the CBN is expected to have immediate effects on the economy. One anticipated impact is an increase in foreign exchange inflow, which can benefit the economy.
However, Nwizu also foresees a potential consequence of this directive, namely a further rise in the inflation rate. As seen today, the aggressive rise in the exchange rate within the I&E window could contribute to inflationary pressures.
