The Central Bank of Nigeria (CBN) has finally let go of pegs on the naira, allowing the market forces to determine the true value of the local currency against other currencies across the world. This was disclosed by Godwin Emefiele, governor of the bank, who spoke at a press conference in Abuja on Wednesday. It was learnt that under the new plan, the official exchange rate of the naira will exist in a "single flexible window,"which will likely be determined by market forces.
Godwin Emefiele's press conference in Abuja announced a series of measures to manage the new forex policy; these include:
1. The introduction of Forex Primary Dealers
2. Futures Market to enable end users to lock down rates
3. 12 other measures to ensure transparency and stability of the new market.
Emefiele said the bank will operate a single trading window, which will take off on June 20, 2016, adding that the CBN will only step in from time to time regulate the market.
The financial mogul who also disclosed that the bank will appoint less than a dozen primary dealers who would now be in charge of foreign exchange trading, driving flexibility in the system, added that the 41 banned items remain banned, and cannot access forex from the new window.
The announcement end months of speculation about the official value of the Nigerian currency. President Muhammadu Buhari, who is currently on medical vacation in the United Kingdom, had initially opposed any form of devaluation, but his hands appear to have been forced by the necessity of borrowing badly-needed funds to finance a budget hampered by a debilitating shortfall in oil production.