By Omodele Adigun
The Central Bank of Nigeria (CBN) may has officially adopted the Nigerian autonomous foreign exchange (NAFEX) rate to weaken the naira by 8 percent to N410.25/$1.
Consequently, the apex bank has updated its website to reflect the new rate after removing the official exchange rate of N379 to the dollar from its website two weeks ago in a bid to unify the country’s forex (FX) rates. This implies that the nation’s official exchange rate will now be determined by NAFEX rate at the importer and exporter (I&E) FX window. CBN had introduced the I&E window in 2017 to improve foreign exchange market mechanisms, deepen market liquidity, and ensure prompt execution and settlement of all FX transactions.
The NAFEX window is a market trading segment for investors, exporters and end-users that allows FX trades to be made at a market-determined rate.
Nigeria operates multiple exchange rate windows ranging from the I&E (NAFEX) where forex is traded between exporters, investors, and purchasers of forex, the SMEIS window where forex is sold to importers, and the BDC window which is where forex is sold to retailers.
Over the years, lack of clarity on the nation’s foreign exchange windows has been a cause for concern for investors who have been worried about currency risk.
Meanwhile, currency in circulation dropped by N10billion from N2.81trillion as of the end of March to N2.8trillion as of the end of April, according to latest statistics from the Central Bank of Nigeria released on Monday. According to figures from the CBN, the figure dropped by N50billion in February from N2.83trillion as of January to N2.78trillion as of the end of February. It had earlier dropped by N70billion in January from N2.9trillion as of December 2020.