The Central Bank of Nigeria (CBN) has taken a significant step towards foreign exchange rate convergence by adopting a clean float at the interbank market. This liberalist move allows the interplay of demand and supply to determine the equilibrium rate, resulting in a plunge in the naira’s value.

The naira’s depreciation extends to the investor’s and exporter’s window, suggesting a broader adjustment of rates. The CBN has confirmed the collapse of exchange rates in the I&E window, directing all eligible transactions to access foreign exchange at that window. While fears of a further depreciation exist, experts hope that the CBN will increase FX supply to raise liquidity levels and enable foreign investors to repatriate their funds.

The aviation industry, capital market, telecommunication infrastructure investments, and manufacturers have all been affected by the FX liquidity crisis, with significant amounts of capital trapped. The move towards rate harmonization and increased liquidity is seen as crucial for strengthening the economy and reducing unemployment.