The Central Bank of Nigeria (CBN), on Wednesday, June 14, informed all authorised dealers and the general public of immediate changes to operations in the Nigerian Foreign Exchange (FX) market.
The new policy means unifying all forex market segments and collapsing all previous windows into one.
They’re scrapping the old official rate and using a fancy window called Investors’ and Exporters’ (I&E) for reference.
Also, those looking to travel will go through the banks, which will use the same I&E rates.
The move is part of the Tinubu administration’s efforts to improve liquidity and stability in the market and attract foreign investors into the Nigerian economy.
Prominent civic tech organisation, BudgIT, has listed four fundamental changes the policy will influence.
1) There’s no longer an official rate. All rates will be referenced from the I&E FX window, where importers and exporters can participate.
2) All applications for Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) will be made through banks. Rates will be referenced from the I&E window.
3) Banks and participating financial institutions are not allowed a profit of more than N1. This means the difference between the selling and buying prices from banks is pegged at N1. They will keep an order book for transparency.
4) All government transactions, such as FX earnings from oil and other exports, will now be exchanged at I&E rates (previous-day average rates).
This means more funds for the Federation Account Allocation Committee (FAAC) allocations, but a challenge awaits governments with substantial external debts.
