The Central Bank of Nigeria (CBN) has officially adopted the Nigerian autonomous foreign exchange (NAFEX) rate — weakening the naira by 8 percent to N410.25/$1.
The apex bank has also updated its website to reflect the new rate.
Two weeks ago, TheCable had reported the removal of the official exchange rate of N379 to a dollar from its website — in a bid to unify the country’s forex (FX) rates.
This implies that the nation’s official exchange rate will be determined by NAFEX rate or the importer and exporter (I&E) FX window.
The 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) window 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 Nigeria’s foreign exchange windows has been a cause of concern for investors who are worried about currency risk.
The World Bank had urged the government to unify its various windows before the $1.5 billion budget support loan to Nigeria is disbursed.
The International Monetary fund (IMF) has also advised the Nigerian government to fast track the unification of the exchange rates to achieve desired economic growth.
Last month, while approving the sum of $3.4 billion as emergency financial support for Nigeria, Mitsuhiro Furusawa, the deputy managing director/acting chair of IMF, urged the country to expedite action towards a more unified and flexible exchange rate.
On Monday, Nigerian naira gained 0.18 percent to close at N411.25/$1 at the I&E forex window and depreciated to N486/$1 at the parallel market.