Yesterday, the Nigerian naira experienced a slight increase of N6, closing at N782/$ in the Investors and Exporters (I&E) window, which is the official market. This appreciation of the local currency can be attributed to improved liquidity and increased transaction activities within the official window.
Previously, on Monday, the naira closed at N744/$ in the I&E window but experienced a loss of N44/$ on Tuesday before making a sudden rebound yesterday.
The Central Bank of Nigeria (CBN) introduced unified exchange rates within the I&E window, allowing market forces to determine the naira’s exchange rate. This move comes as the CBN abolished multiple exchange rates in the economy. Consequently, the rate in the I&E window now represents the official exchange rate for the naira.
The unification of multiple exchange rates into the I&E window is seen by stakeholders as a significant development in the CBN’s efforts to achieve exchange rate stability.
According to data from FMDQ Exchange, market liquidity has gradually decreased from a turnover of over $260 million to less than $70 million in recent weeks. The CBN’s policy aims to ensure that forex dealers and investors can freely buy and sell dollars at the exchange rate of their choice, provided they can find buyers. This approach is intended to allow the naira to trade at a market-clearing rate in the forex market.
Tosin Eniolorunda, CEO of Moniepoint, expressed support for the CBN’s decision to float the naira, seeing it as a positive step for the economy that fosters growing investor confidence.
“The decision is good for business, jobs, and growth. It will help Nigeria’s entrepreneurs to do business globally and attract foreign investment. It will also help reduce inflation, leaving more money in people’s pockets,” he said.
Dr. Aminu Gwadabe, the President of the Association of Bureaux De Change Operators of Nigeria (ABCON), advised the CBN to ensure liquidity in the retail end of the market by de-monopolizing diaspora remittances and strengthening collaboration with BDCs, which play a key role in the retail segment of the forex market.
