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HomeTop NewsCBN finally abolishes multiple forex market, merges all segments of forex mkt...

CBN finally abolishes multiple forex market, merges all segments of forex mkt with I&E window

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By Samuel Bankole

The Central Bank of Nigeria (CBN) officially ended the era of multiple exchange rates on Wednesday as the regulatory bank announced the unification of all segments of the foreign exchange (FX) market.

In a circular signed by the bank’s director of financial markets, Angela Sere Ejembi, the regulatory bank said all FX windows are now collapsed into the investors and exporters (I&E) window.

The CBN said the move is part of a series of immediate changes to operations in the Nigerian foreign exchange market.

“Abolishment of segmentation. All segments are now collapsed into 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,” the circular signed by Angela Sere-Ejembi, director, CBN financial markets department, reads.

“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 April 21, 2017, and referenced FM/DIR/CIR/GEN/08/007. All eligible transactions are permitted to access foreign exchange at this window.

“The operational rate for all government-related transactions shall be the weighted average rate of the preceding day’s executed transactions at the I&E window, calculated to two (2) decimal places.

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“Proscription of trading limits on oversold FX positions with permission to hedge short positions with OTC futures” Limits on overbought positions shall be zero.

Re-introduction of order-based two-way quotes with a bid-ask spread of N1 All transactions shall be cleared by a central counterparty (CCP).

“Reintroduction of the Order Book to ensure transparency of orders and seamless execution of trades”

“The operational hours of trades shall be from 9 a.m. to 4 p.m., Nigeria time.”

The CBN said further guidance on the operational changes would be communicated to authorized dealers and the general public in due course.

For the first time since February 2017, when the regulatory bank established the I&E forex window, the naira was allowed to trade freely with willing sellers and willing buyers.

The naira depreciated significantly as the dollar was quoted at N664.04 against the dollar on the I&E fx window compared with the last close of N471.67 per dollar.

(omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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