NAIRAMETRICS
The Central Bank of Nigeria (CBN) introduced a special trading segment called the Investors’ & Exporters’ FX Window (I&E FX Window) to enhance liquidity and facilitate the timely execution and settlement of eligible foreign exchange (FX) transactions.
This window aims to deepen the FX market and accommodate the FX obligations of investors, exporters, and end-users.
Purpose of the I&E Window: The primary goal of the Investors’ & Exporters’ FX Window is to enhance liquidity in the Nigerian FX market.
- By providing a dedicated platform for investors, exporters, and end-users, the CBN aims to accommodate all FX obligations and ensure efficient price discovery based on prevailing market conditions.
Eligible Transactions
The I&E Window allows for various types of transactions, including:
- Invisible Transactions: This category covers a wide range of transactions such as loan repayments, dividends/income remittances, capital repatriation, consultancy fees, technology transfer agreements, personal home remittances, and other eligible invisible transactions outlined in the CB Foreign Exchange Manual.
- Bills for Collection: Transactions related to bills for collection, which involve the collection of payments on behalf of customers, are also eligible to access the I&E Window.
- Trade-related Payment Obligations: Any other payment obligations arising from trade activities can be processed through the I&E Window at the customer’s discretion.
It’s important to note that for the above permitted invisible transactions and bills for collection, only US dollars sourced from the CBN FX Window (limited to Secondary Market Intervention Sales – SMIS) Wholesale (Spot and Forwards) are eligible for purchase.
Additionally, any other trade-related payment obligations can be executed through the I&E FX Window at the customer’s request.
Participants
The supply of foreign currency to the I&E FX Window is sourced from portfolio investors, exporters, Authorized Dealers (such as banks), and other parties with foreign currency holdings to exchange for Naira.
The CBN also actively participates in this window as a major provider of liquidity and ensures professional market conduct.
The supply of foreign currency to the I&E Window comes from different entities, including:
- Portfolio Investors: Investors engaged in the Nigerian market who possess foreign currency that they want to exchange for the Naira.
- Exporters: Businesses involved in export activities that have foreign currency earnings and wish to convert them into local currency.
- Authorised Dealers: These are CBN-licensed entities, such as banks, that act as intermediaries in FX transactions. They facilitate the buying and selling of foreign currency for their customers.
- CBN: The Central Bank of Nigeria participates in the I&E Window as a market participant to promote liquidity and ensure professional market conduct.
Price Discovery Mechanism
To facilitate price discovery until the market fully transitions to FX Trading Systems, participants at the I&E Window currently trade via telephone.
