The Central Bank of Nigeria (CBN) has adjusted the narrate exchange rate from N360 to N380 to dollar at the its Secondary Market Intervention Sales (SMIS).
The move was to enable the regulator increase their bidding price to N380/$1 floor. The SMIS is the market where importers bid for forex using Letters of Credit and Form M.
But the official naira exchange rate still remains at N360 to dollar. But the current adjustment may be the beginning of further unification of the exchange rate as canvassed by the International Monetary Fund and World Bank in their earlier advice to the Federal Government.
According to market sources, the CBN informed banks that they will only accept bids at SMIS from N380/$1 and above and no longer N360/$1 meaning those who bid lower will not get any forex allocation.
Transaction success in this market is based on bids with those who bid higher than the floor as they are often in an advantageous position to secure forex.
This is essentially a huge attempt at unifying the naira and another adjustment of the exchange rate by the CBN.
Recall the CBN Governor had informed investors that the bank will be unifying the exchange rate towards what is being traded at the NAFEX market where investors and exporters trade forex.
Currently, rates are set at a floor of N360/$1 and a ceiling of N385/$1. Thus bidders are expected to bid within that range. The higher the bid the better your chances at getting forex. It is unclear if there were any buyers that bid above N360 as we gather most of the importers were not informed of the changes in prices until today.
