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Naira Depreciates To 702/$, CBN Directive Likely

Waffi TV reported that, the CBN instructed Deposit Money Banks to eliminate the rate cap on the naira at the official Investors’ and Exporters’ Windows of the foreign exchange market.

By Johnson Atoukudu:

On Thursday, at the end of the business day, the Nigerian naira was traded at a rate of 702.19/dollar. This occurred as a result of the Central Bank of Nigeria allowing the national currency to freely fluctuate against the US dollar and other global currencies.

The depreciation in value was approximately five percent compared to the previous day’s rate of N664.04/dollar. This adjustment coincided with reports from government officials suggesting that the Central Bank of Nigeria might supply foreign exchange to the market in the upcoming days.

Waffi TV reported that, the CBN instructed Deposit Money Banks to eliminate the rate cap on the naira at the official Investors’ and Exporters’ Windows of the foreign exchange market.

This development comes shortly after President Bola Tinubu pledged to unify the country’s multiple exchange rates and shortly before the suspension and detention of CBN Governor Godwin Emefiele. Emefiele’s unconventional monetary policies had hindered investors and the economy.

The decision by the CBN to float the currency was applauded by the organized private sector and economists who believed it would unify the multiple exchange rates in the country and bring stability to the foreign exchange market.

Consequently, buyers and sellers in the official FX markets can now quote rates based on their preference, as opposed to the previous practice of rates being determined solely by the Central Bank of Nigeria.

As a result of these changes, the naira has experienced a significant decline, reaching a rate of 702.19/dollar at the close of trading at the I&E Window on Thursday, according to data from the FMDQ Securities Exchange.

The statement further reveals that the CBN has consolidated all foreign exchange segments into the I&E window.

CBN

It read, “The Central Bank of Nigeria wishes to inform all authorised dealers and the general public of the following immediate changes to operations in the Nigerian Foreign Exchange Market: Abolishment of segmentation. All segments are now collapsed into the Investors and Exporters window. Applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks.

“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/DlR/ClR/GEN/08/007. All eligible transactions are permitted to access foreign exchange at this window.

According to currency dealers in Kano, Abuja, and Lagos, the naira remained stable at 757/dollar at the parallel market on Thursday.

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