The Central Bank of Nigeria (CBN) on Wednesday informed all authorised dealers and the general public of immediate changes to operations in the Nigerian Foreign Exchange (FX) Market.
The changes include “abolishing the segmentation of the FX market into different windows. All transactions will now be done through the Investors and Exporters (I&E) window, Applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks.”
With this collapse, applications for Business Travel Allowance and Personal Travel Allowance will be carried out at the official exchange rate at the I&E window, as determined by market forces.
According to the statement, the apex bank will be “reintroducing the ‘Willing Buyer, Willing Seller’ model at the I&E window, where all eligible transactions can access foreign exchange at their preferred rates.”
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However, the CBN will set the operational rate for transactions related to the government. This rate will be the weighted average rate of the previous day’s executed transactions at the I&E window, rounded to two decimal places.
With the emergence of market forces as the major determinants of exchange rates, the currency price will tow a floating exchange rate model.