The Nigerian Foreign Exchange Market; Rate Determination; Control and Prospects for Naira Convertibility
The Nigerian foreign exchange market; rate determination; control and prospects for Naira convertibility
Good morning members of the high table, my colleagues in the industry and all other distinguished guests. It is my greatest pleasure to present this paper at the Foreign Exchange seminar organized by the Chartered Institute of Bankers of Nigeria. I hope I am able to shed light on this extremely challenging topic.
Definition:
The foreign exchange market can be defined as the collective activity of exchanging currencies i.e. where currencies are bought and sold. The price for the currency is known as the exchange rate.
This is one unique market that is not located anywhere but exists on electronic platforms – telephones, telex, internet and other electronic gadgets.
The reality of today is that most convertible currencies offer a 24-hour access for market participants. This unique feature has brought with it significant depth in the market.
The Nigerian foreign exchange market:
The Nigerian foreign currency market is to a large extent a part of the global Fx market. However, it is still in the infancy stage in terms of development and does not offer a 24-hour access to the trading of its local currency.
To appreciate the Nigerian forex market it is pertinent to highlight its make up. In carrying out this analysis the market can be divided into two major categories;
• The official market • The unofficial market
These markets have unique features, which therefore dictate the profiles of its participants.
The official market, as the name connotes, is the officially recognized market by the regulatory authorities. The market allows the sale of foreign currency for transactions that are eligible and allowed by the Central Bank of Nigeria (Federal Government of Nigeria). Such eligible transactions must be supported by all specified documents. This market is further broken down into two categories, the Central Bank of
Good morning members of the high table, my colleagues in the industry and all other distinguished guests. It is my greatest pleasure to present this paper at the Foreign Exchange seminar organized by the Chartered Institute of Bankers of Nigeria. I hope I am able to shed light on this extremely challenging topic.
Definition:
The foreign exchange market can be defined as the collective activity of exchanging currencies i.e. where currencies are bought and sold. The price for the currency is known as the exchange rate.
This is one unique market that is not located anywhere but exists on electronic platforms – telephones, telex, internet and other electronic gadgets.
The reality of today is that most convertible currencies offer a 24-hour access for market participants. This unique feature has brought with it significant depth in the market.
The Nigerian foreign exchange market:
The Nigerian foreign currency market is to a large extent a part of the global Fx market. However, it is still in the infancy stage in terms of development and does not offer a 24-hour access to the trading of its local currency.
To appreciate the Nigerian forex market it is pertinent to highlight its make up. In carrying out this analysis the market can be divided into two major categories;
• The official market • The unofficial market
These markets have unique features, which therefore dictate the profiles of its participants.
The official market, as the name connotes, is the officially recognized market by the regulatory authorities. The market allows the sale of foreign currency for transactions that are eligible and allowed by the Central Bank of Nigeria (Federal Government of Nigeria). Such eligible transactions must be supported by all specified documents. This market is further broken down into two categories, the Central Bank of