CBN shifts forex transactions to I&E window
The Central Bank of Nigeria (CBN) has shifted official forex transactions to the Investors’ & Exporters (I&E) forex window, it was learnt yesterday.
The apex bank’s adoption of a new flexible exchange-rate policy for official transactions effectively marks the third devaluation of the naira in a year.
The exchange rate in the Investors and Exporters Window ( I&E window ) also called the Nigerian Autonomous Foreign Exchange -NAFEX has remained at N410/$1 since February. The naira exchanges at N486 to dollar at the parallel market.
Bloomberg yesterday quoted the Finance Minister, Zainab Ahmed saying the government will start to use the flexible rate, that has until now applied to investors and exporters, for government transactions too.
The NAFEX, as the flexible rate is known, has averaged N410 to the dollar since the beginning of the year against the CBN’s old fixed rate of N379 to dollar.
“Within the government and the central bank, there is only one official rate and that’s the NAFEX rate,” Ahmed said.
A weaker naira will boost Africa’s biggest crude producer’s revenue from oil, which has been converted at the fixed official rate. Earnings from oil exports account for about half of Nigeria’s revenue and about 90 per cent of foreign-exchange earnings.
The CBN has already devalued its currency twice since March last year. The adoption of the flexible-rate policy could assist discussions with the World Bank for a $1.5 billion loan that is partly conditional on currency reforms.
The NAFEX rate was introduced in 2017 as a way of wooing foreign investors without formally devaluing the currency. Recently, investors have complained about dollar shortages.