International Monetary Fund (IMF) approves Nigeria’s exchange rate unification policy
The International Monetary Fund (IMF) has shown its support for the Central Bank of Nigeria’s (CBN) new policy of unifying all exchange rates. The policy, which merges all rates into the Investors and Exporters (I&E) window, will allow the exchange rate to be determined by market forces.
“The Fund greatly welcomes the authorities’ decision to introduce a unified market-reflective exchange rate regime in line with our long-standing recommendations. We stand ready to support the new administration in its implementation of FX reforms.” said Ari Aisen, IMF Resident Representative for Nigeria on Friday.
Medical bills, school fees, business travel allowance and personal travel allowance, and small and medium enterprises will continue to be processed through the I&E window, confirming that all forms of exchange rate segmentation are abolished.
According to Angela Sere-Ejembi, the CBN Director of Financial Markets, the changes to the foreign exchange market will reintroduce the “Willing Buyer, Willing Seller” model at the I&E Window, stating that “All eligible transactions are permitted to access foreign exchange at this window”.
This move will usher in “market-driven” exchange rates and provide the much-needed liquidity into the economy.
With the IMF’s support, this could be a breakthrough step towards stabilizing the country’s currency that has been undervalued for years.
