The naira traded at 702.19/dollar at the close of business on Thursday, as the Central Bank of Nigeria has allowed for a free float of the national currency against the dollar and other global currencies.
This means that the currency lost about five per cent of its value within 24 hours from the N664.04/dollar recorded at the close of business on Wednesday.
This came as multiple governmental officials revealed that the Central Bank of Nigeria might begin to supply foreign exchange to the market in the coming days.
CBN directed Deposit Money Banks to remove the rate cap on the naira at the official Investors’ and Exporters’ Windows of the foreign exchange market.
This came barely two weeks after President Bola Tinubu promised to unify the nation’s multiple exchange rates and less than a week before the suspension and detention of CBN Governor Godwin Emefiele, whose unorthodox monetary policies had become a stumbling block to investors and the economy.
The CBN’s decision to float the currency was hailed by the organised private sector and economists who said the move would unify the country’s multiple exchange rates and bring sanitise the FX market
The development means buyers and sellers of foreign currency in the official FX markets are now allowed to quote rates they find comfortable in the FX market, as against the previous practice where rates were dictated by the Central Bank of Nigeria.
Following the development, the naira has been on a free fall, weakening to 702.19/dollar at the close of trading at the I&E Window on Thursday, according to data from the FMDQ Securities Exchange.
According to the statement, the CBN has collapsed all foreign exchange segments into the I&E window.
It read, “The Central Bank of Nigeria wishes to inform all authorised dealers and the general public of the following immediate changes to operations in the Nigerian Foreign Exchange Market: Abolishment of segmentation. All segments are now collapsed into the Investors and Exporters window. Applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks.
“Re-introduction of the ‘Willing Buyer, Willing Seller’ model at the I&E Window. Operations in this window shall be guided by the extant circular on the establishment of the window, dated 21 April 2017 and referenced FMD/DlR/ClR/GEN/08/007. All eligible transactions are permitted to access foreign exchange at this window.
Meanwhile, at the parallel market on Thursday, the naira closed flat at 757/dollar, according to currency dealers in Kano, Abuja and Lagos.