SAT, JUNE 17 2023-theGBJournal |On 14 June, the Central Bank of Nigeria (CBN) announced the abolishment of its multiple FX windows, collapsing all the official FX segments into the Investors & Exporters Window (IEW).
Accordingly, the CBN re-introduced the “willing buyer, willing seller” model at the IEW, with the operations guided by the extant circular on the establishment of the window, dated 21 April 2017.
In our view, the preceding effectively sets the country on a unified exchange rate path, especially since the IEW is now experiencing a price discovery journey since the FX reform announcement.
While the CBN’s action is positive in boosting foreign investor’s confidence, we think they may adopt a wait-and-see approach, for now, looking for signals on the CBN’s plans to start clearing the FX backlogs and boosting FX supply to support the market in the near term.
Besides, we suspect that due to the previous lessons learnt from the damaging currency controls of the prior administration, investors will be on the lookout for signs that there are no counter policies to prevent them from leaving at any point in the near term before returning to the market in their droves.
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