CBN abolishes Naira4Dollar Scheme, announces unification of FX windows

 

The Central Bank of Nigeria (CBN) has announced the abolishment of all forex segmentation, meaning there will be a single exchange rate in the country moving forward.

It was noted that Nigeria’s multiple FX segments are now collapsed into the Investors and Exporters (I&E) window.

This means the forex requests for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks (DMBs) with the I&E rate.

This was disclosed in a directive titled Operational Changes To The Foreign Exchange Market signed by Mrs Angela Sere-Ejembi, the Director, Financial Markets at the apex bank on Wednesday evening, confirming the actualisation of plans by the new Tinubu administration to unify the exchange rates.

The CBN also removed the RT200 Rebate Scheme and the Naira4Dollar Remittance Scheme, with effect from June 30, 2023. These schemes were launched by the suspended Governor of the CBN, Mr Godwin Emefiele, under the administration of former President Muhammadu Buhari.

This development will also bring back the re-introduction of the “Willing Buyer, Willing Seller” model at the I&E Window, which is a Peer-2-Peer (P2P) trading model.

It was also disclosed that the operational rate for all government-related transactions should be the weighted average rate of the preceding day’s executed transactions at the I&E window, calculated to two (2) decimal places.

The apex bank also banned trading limits on oversold FX positions with permission to hedge short positions with Over-the-Counter (OTC) futures. This means limits on overbought positions shall be zero.

The CBN has also announced the re-introduction of order-based two-way quotes, with a bid-ask spread of N1, adding that all transactions shall be cleared by a Central Counter Party (CCP).

Also announced was the reintroduction of the Order Book to ensure transparency of orders and seamless execution of trades, adding that the operational hours of trades shall be from 9 am to 4 pm (Nigeria time).

The Naira had closed at N664.06/$1 at the I&E FX Market on Wednesday night following news that the CBN had approved a free float.