Nigeria has officially floated its naira currency after years of sticking with a hard peg that spooked investors and drained dollars from the economy.
The development means buyers and sellers of foreign currency in the official FX market are now allowed to quote rates they find comfortable in the FX market, as against previous practice where rates were dictated by the Central Bank of Nigeria (CBN).


The Investors & Exporters (I&E) window is now quoting a range of between N750 and N755/$, according to customers who cited emails received from their banks.

That implies a 21 percent decline in the naira compared to the previous rate of N463/$ which the Central Bank of Nigeria (CBN) is still quoting as the I&E rate on its website. However, the last time the CBN updated the rate was June 9.

The latest move by the CBN follows President Bola Tinubu’s suspension of CBN governor Godwin Emefiele whose unorthodox monetary policies had become a stumbling block to investors and the economy.

The exchange rate could go as high as N800 by the end of today, according to some bankers, who say an initial knee-jerk reaction could cause the naira to weaken sharply before recovering some lost ground.

“Given that this new rate in the official market is the same as the parallel market, there is no incentive for people and businesses with genuine transactions to patronize the parallel market, hence FX trading activity in the parallel market will slow down significantly,” Abiola Rasaq, an economist and former head of investor relations at United Bank for Africa.

“Subsequently, the official market should attract more FX supply and rate should gradually ease in the I&E window, and such would cause rates in the parallel market to also ease,” Rasaq said.

The CBN’s next move should be to prioritise supply of dollars to support the naira float.

“The convergence of the rates is only the first step, the next step is the most crucial and that is to boost supply into the market,” a source told BusinessDay.

“No foreign investor will come without a hedge and that can only come when there is assurance of supply. That’s the hard work,” the source said.

Another knowledgeable source is of the view that allowing the market to determine the FX rate is only the first of six steps to fixing Nigeria’s broken FX market.

The second step must be to provide a hedge mechanism that is priced in line with the market while the third step is to ensure market yields are attractive to Foreign Portfolio Investors (FPI).

The next steps are to ensure transparency and remove all controls around domiciliary accounts. Finally, there is also a need to clear the dollar backlog in the market in order to attract FPIs.

“The focus is on supply,” the source said.

Expectations are high after the initial move to fix Nigeria’s broken FX market.

Chidi Uzo, a fund manager at Stanbic IBTC Pension Managers Ltd, said the move was “a bold step in the right direction.”

“However this should go in tandem with the lifting of capital restrictions for investors waiting on the sidelines to repatriate their funds. We expect foreign investor participation to be swayed by the extent to which capital is allowed to flow freely,” Uzo said.

“Overall, the effective harmonisation of Nigeria’s multiple exchange rates by allowing market forces to determine the fair value of the naira should immediately reverse the multi-year widening spreads between the official exchange rate and the parallel market exchange rates,” he said.

https://businessday.ng/news/article/nigeria-officially-floats-naira-as-ie-rate-hits-n755/

Let me go and buy dollars. 1000 loading. Imagine the profits

Let it go to 1000/1$

nedu666:
Let me go and buy dollars. 1000 loading. Imagine the profits

I have ask my tenants to pay in $$, agbadorians can keep their Naira stock.

Foreign exchange is not something you fix/ manipulate in your room and expect the world to abide by. Nigeria must have a product or service to offer the globe in exchange for the FX. None of that has changed and our export volumes are stagnant and even retrogressing.

What is Nigeria’s balance of trade to the point of floating fx?, I am not saying that the gap between CBN rate and parallel market market should be left as is … definitely, efforts should be made to bridge the gap through devaluation, more USD supply and relaxing some of the fx transaction restrictions

For Nigeria to conveniently float the rates, we must get our balance of trades rights. Until then, the CBN must have some control over the rates. The parallel market is sustained by real fx demands which you can’t wish away. with this floating, speculators and banks will drive the market while CBN plays catch up.

USD will exchange for 1000 naira in 2 months

Their euphoria only managed to last for one day before reality sets in

The naira falling is not a surpris, so far Banks are not directing People that need it to go and buy from Aboki, is fine

Above 1k for dollar by year's end.

https://www.aljazeera.com/news/2023/6/14/nigeria-allows-naira-to-drop-more-than-36-on-official-market

nedu666:
Let me go and buy dollars. 1000 loading. Imagine the profits

now you are getting it, with time, supply will be more than demand, hence natural fall of dollars with respect to Naira, and another thing is.

Validated:

I have ask my tenants to pay in $$, agbadorians can keep their Naira stock.

Lies

You do not have a property

Tsolutionifede:
now you are getting it, with time, supply will be more than demand, hence natural fall of dollars with respect to Naira, and another thing is.

You believed the rubbish talk because you don't like Asiwaju

nedu666:
Let me go and buy dollars. 1000 loading. Imagine the profits

Na Una aboki go use cashout and dump Thier loads of dollars. Ask urself if u buy dollars who do u intend to sell to when banks open up dollar transaction on naira cards. That same aboki that sold to u at 750 now won't buy it anything above bank rate and I can assure u that 1000 u expecting won't come. Emiefele destroyed the naira by running those stupid dual rates creating abitrage and enriching a few. With the naira floated it's true value will come to fore and I don't see anything above N700 to a dollar. 8 yrs ago naira was trading around 198 what has really changed. We were an importing nation 8yrs ago so those talk about import and export is bullshit. With subsidy gone and no more using our scarce dollar to defend the naira, that 1k na only for dream e go happen. U can quote me anytime

Flets:
Foreign exchange is not something you fix/ manipulate in your room and expect the world to abide by. Nigeria must have a product or service to offer the globe in exchange for the FX. None of that has changed and our export volumes are stagnant and even retrogressing.

What is Nigeria’s balance of trade to the point of floating fx?, I am not saying that the gap between CBN rate and parallel market market should be left as is … definitely, efforts should be made to bridge the gap through devaluation, more USD supply and relaxing some of the fx transaction restrictions

For Nigeria to conveniently float the rates, we must get our balance of trades rights. Until then, the CBN must have some control over the rates. The parallel market is sustained by real fx demands which you can’t wish away. with this floating, speculators and banks will drive the market while CBN plays catch up.

USD will exchange for 1000 naira in 2 months

This can be fixed by Dr dollarization .

But this is a suicide move .

Ask Hitler, Chavez, Qaddafi , Assad.