January 4, 2021/Coronation Research

The Central Bank of Nigeria (CBN) follows a managed exchange rate policy, but is it moving towards a crawling peg? Last year saw several changes in the CBN’s official rate, and smaller (though significant) changes in Naira exchange rates quoted by FMDQ, Nigeria’s over-the-counter (OTC) exchange.

Moves recorded in the last trading sessions of 2020 brought the Importers & Exporters Window (I&E Window) to N410.25/US$1.

This goes some way to narrowing the gap – now less than 15.0% – between the OTC currency market and the cash parallel exchange rate, and goes some way to addressing the World Bank’s criticisms of multiple exchange rates. This suggests that there may be more step-changes in Naira/US dollar in 2021.

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