By Chinwendu Obienyi
Economic experts have warned that the Central Bank of Nigeria (CBN)’s adoption of the Investors and Exporters (I&E) foreign exchange window rate will reduce the controversy on the reference rate for use of transactions, even as others say this might become more of a problem to investors who are yet to understand Nigeria’s multiple exchange window regime.
This is coming after the apex bank removed the official exchange rate of N379 to a dollar from its website as its other parameters; inflation rate, monetary policy rate (MPR) and crude oil price in USD retained online presence on its website.
According to analysts, the decision was taken due to the regular exchange rates changes that make using the rate on CBN’s website unreliable for business and inventory planning, implying that the I&E window is now the default reference exchange rate for official transactions in the country.
The I&E FX window is the market trading segment for investors, exporters and end-users that allows for FX trades to be made at exchange rates determined based on prevailing market circumstances.
The window was introduced in 2017 by the CBN to improve foreign exchange market mechanisms, deepen market liquidity, and ensure prompt execution and settlement of all FX transactions.
Daily Sun investigations reveal that since the CBN adjusted the exchange rate in August 2020, it has retained the exchange rate of N379/$1 on its website page which represented the country’s official exchange rate. However, all government transactions since the start of the year have been converted using the prevailing exchange rate at the official I&E window confirming that the official exchange rate of $379/$1 is dead.
Back in March, the Minister of Finance, Zainab Ahmed had said Nigeria had moved into a flexible exchange rate by adopting the Nigerian Autonomous Foreign Exchange (NAFEX) rate as the new official rate for government transactions. But in a swift response, the CBN Governor, Godwin Emefiele, denied claims of a flexible exchange rate insisting that Nigeria still operates a managed float.