The Central Bank of Nigeria (CBN) has unveiled a pivotal shift in the Nigerian Foreign Exchange (FX) market by introducing the Nigerian Autonomous Foreign Exchange Market (NAFEM) as the new terminology to replace the Investors’ and Exporters’ (I&E) FX Window.
This development is in accordance with the CBN’s press release, “Operational Changes to the Foreign Exchange Market,” issued on June 14, 2023.
The primary objective behind this nomenclature change is to eliminate market segmentation and establish uniformity in terminology.
CBN replaces ‘I&E FX window’
This transformation aligns the terminology used in the formal FX markets with the provisions of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, which specifically denotes the Nigerian FX Market as the Autonomous Foreign Exchange Market.
The transition from the I&E FX Window to NAFEM marks a significant transformation in Nigeria’s FX landscape.
FMDQ Securities Exchange Limited (FMDQ Exchange), a prominent entity in the Nigerian financial market, has taken the lead in updating and standardizing all references to the I&E FX Window across relevant systems and market documentation.
This change will also encompass future reports and communications concerning the Nigerian FX market.
The impact of this shift will reverberate across stakeholders in the FX market, including market participants, investors, exporters, and financial institutions, who will need to adapt to the new nomenclature, making NAFEM the standard terminology for referencing the FX market.
The CBN’s strategic decision to eradicate market segmentation represents a substantial policy shift.
By unifying the lexicon used to describe the FX market, the regulator aspires to create a more transparent and consistent environment for all market participants.
This modification is expected to enhance comprehension of the FX market’s operations and regulatory framework.
It is crucial for all stakeholders in the Nigerian FX market to stay informed about this transition and ensure that their internal systems and documentation are updated accordingly.