Naira Begins Free Fall as CBN Introduces Currency Floating Regime
NEW NAIRA NOTES
By Our Reporter
The Central Bank of Nigeria on Wednesday directed commercial banks to collapse all foreign exchange segments into the Investors and Exporters window in what allows free floating of the Naira against the Dollars and other foreign currencies.
Hours after the policy was introduced, it was gathered that Naira has started a free fall against the dollar and other currencies.
In a statement, the Director of Financial Markets, Dr Angela Sere-Ejembi, said Re-introduction of the ‘Willing Buyer, Willing Seller’ model at the I&E Window has been introduced.
Part of the statement reads, “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.
“The 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.
“Proscription of trading limits on oversold FX positions with permission to hedge short positions with OTC futures. Limits on overbought positions shall be zero.
“Re-introduction of order-based two-way quotes, with bid-ask spread of N1. All transactions shall be cleared by a Central Counter Party.
“Reintroduction of Order Book to ensure transparency of orders and seamless execution of trades.”
With the policy, buyers and sellers of foreign currency in the official FX markets can quote rates they feel comfortable in forex market instead of rates according to CBN dictation.
It was gathered that the policy has led to Naira depreciation of N664.04/dollar on Wednesday at I&E Window.
It was also gathered that Naira sold at 757/dollar in the black market, with dealers complaining that the policy was affecting their business.
The Central Bank of Nigeria on Wednesday directed commercial banks to collapse all foreign exchange segments into the Investors and Exporters window in what allows free floating of the Naira against the Dollars and other foreign currencies.
Hours after the policy was introduced, it was gathered that Naira has started a free fall against the dollar and other currencies.
In a statement, the Director of Financial Markets, Dr Angela Sere-Ejembi, said Re-introduction of the ‘Willing Buyer, Willing Seller’ model at the I&E Window has been introduced.
Part of the statement reads, “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.
“The 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.
“Proscription of trading limits on oversold FX positions with permission to hedge short positions with OTC futures. Limits on overbought positions shall be zero.
“Re-introduction of order-based two-way quotes, with bid-ask spread of N1. All transactions shall be cleared by a Central Counter Party.
“Reintroduction of Order Book to ensure transparency of orders and seamless execution of trades.”
With the policy, buyers and sellers of foreign currency in the official FX markets can quote rates they feel comfortable in forex market instead of rates according to CBN dictation.
It was gathered that the policy has led to Naira depreciation of N664.04/dollar on Wednesday at I&E Window.
It was also gathered that Naira sold at 757/dollar in the black market, with dealers complaining that the policy was affecting their business.
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