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The transition comes against the backdrop of currency controls put in place by Nigeria in 2017 during the height of its economic crisis.
Nigeria’s central bank is set to automate foreign currency trades from December. The switching over is from a nearly decade-old over-the-counter trading system. This is aimed at enhancing transparency and removing market distortions.
The Central Bank of Nigeria (CBN) is seeking to boost liquidity in its currency markets. The new system would facilitate a market-driven exchange rate accessible to the public. The CBN also released new guidelines for players in the foreign exchange market designed to reduce speculative activities, eliminate market distortions, and give the CBN improved oversight. These changes have been carried out at the instance of the IMF officials.
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The CBN said a two-week test run would be carried out in November, without specifying the exact dates. The transition comes against the backdrop of currency controls put in place by Nigeria in 2017 during the height of its economic crisis. During that time the CBN introduced multiple exchange rate regimes, including an over-the-counter trading system that masked weaknesses in the naira currency.
