Yesterday, the naira decreased by N7 to end the Investors and Exporters (I&E) session at N763/$.
A sign of rate convergence between the official and black market prices is the naira’s exchange rate in the parallel market, which was N765/$.
The local currency, which ended Tuesday’s trading at N756/$, was unable to maintain the pace of gain because domestic and international investors’ demand for dollars outweighed supply.
Under the I & E Window, the Central Bank of Nigeria (CBN) eliminated numerous exchange rates and switched to a methodology that is driven by the market.
The top bank is putting in place foreign exchange reforms designed to increase market accountability and transparency and increase the amount of foreign money entering the economy.
Stakeholders have called the apex bank’s aim to ensure exchange rate stability through the consolidation of different exchange rates into the I&E window a game changer.
This policy permitted foreign exchange (FX) dealers and investors to buy and sell US dollars at any rate they could find customers for. The goal of this action is to liberate the naira so that it can trade freely at the market clearing rate in the foreign exchange market.
Managing Director, Economic Associates, Dr. Ayo Teriba, said the Bureau De Change (BDC)/ parallel market rate is a reliable indication of market realities, and it is stable.
The new structure, he claimed, will promote FX market transparency, decrease misalignment and transaction costs, and boost investor confidence.
“However, there is more to exchange rate management than simply harmonizing currency values. Market structure, accessibility, and supply must all be taken into account. This necessitates doing away with import restrictions, administrative controls, and currency limitations. Obama was right when he stated, “Africa doesn’t need strongmen, it needs strong institutions,” and that’s what Rewane is saying.