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The Central Bank of Nigeria (CBN) has officially adopted the Nigerian autonomous foreign exchange (NAFEX) rate — weakening the naira by 8 percent to N410.25/$1 according to new information on the apex bank’s website.
This means that the nation’s official exchange rate will be determined by NAFEX rate or the importer and exporter (I&E) FX window.
The CBN had introduced the I&E window in 2017 to improve foreign exchange market mechanisms, deepen market liquidity, and ensure prompt execution and settlement of all FX transactions.
The NAFEX window is a market trading segment for investors, exporters and end-users that allows FX trades to be made at a market-determined rate.
Nigeria operates multiple exchange rate windows ranging from the I&E (NAFEX) window where forex is traded between exporters, investors, and purchasers of forex, the SMEIS window where forex is sold to importers, and the BDC window which is where forex is sold to retailers.
The World Bank had urged the government to unify its various windows before the $1.5 billion budget support loan to Nigeria is disbursed.
The International Monetary fund (IMF) has also advised the Nigerian government to fast track the unification of the exchange rates to achieve desired economic growth.