Naira closes at N756/$ in official market

The naira yesterday recovered from N107 loss it recorded on Monday to post N14 gain at the Investors’ and Exporters’ (I&E) window- the official market.

The local currency closed at N756/$ at the I&E window, stronger than N770/$ it ended on Monday.

The appreciation of the naira brought it closer to the N760/$ rate at the parallel market, an indication of rate convergence.

The Central Bank of Nigeria (CBN) is implementing foreign exchange reforms meant to bring transparency and accountability into the market and boost foreign capital inflows to the economy.

The unification of multiple exchange rates into the I&E window has been described by stakeholders as a game-changer in the apex bank’s plan to achieve exchange rate stability.

The policy allows forex dealers and investors to buy and sell dollars at exchange rate of their choice, provided they can find buyers. This move aims to ensure that the naira is allowed to trade at the market-clearing rate in the forex market.

In an emailed report to investors, an economist and Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, said the adoption of a single exchange rate and the “willing buyer-willing seller model” by the CBN was cheery news for the market.

He said the new exchange rate framework is expected to increase transparency in the forex market, reduce exchange rate misalignment and transaction costs, and buoy investor confidence.

“However, exchange rate management goes beyond exchange rate unification. It must address issues surrounding market structure, easy access and adequate supply. This means effectively dismantling forex rationing, administrative controls, and reviewing import restrictions. As Barack Obama declared, “Africa doesn’t need strongmen, it needs strong institutions,” Rewane said.

In announcing the policy shift, CBN Director, Financial Markets, Angela Sere-Ejembi, said the operational changes to the foreign exchange market also include the re-introduction of the “Willing Buyer, Willing Seller” model at the I&E Window.

“Operations in this window shall be guided by the extant circular on the establishment of the window, dated 21 April 2017 and referenced FMD/DIR/CIR/GEN/08/007. All eligible transactions are permitted to access foreign exchange at this window,” she said.

According to the circular, all operational rate for all government-related transactions shall be the weighted average rate of the preceding day’s executed transactions at the I&E window, calculated to two decimal places.