Foreign Exchange

The Foreign Exchange (FX) market is a market for trading and exchanging any currency pair. The value of one currency in terms of another currency is known as the “Exchange Rate”. Exchange rate movements are determined by the demand and supply for the relevant currencies in any currency pair over time, based on trade value, capital flows and market expectations.

Key participants in the Nigerian FX market includes:

  • Central Bank of Nigeria (CBN)
  • Authorised Dealers – Financial institutions licensed by the CBN to trade FX and make markets in the Nigerian FX market
  • Clients – Retail or corporate financial market participants who buy or sell FX to meet their day-to-day personal or business needs 

The Nigerian FX market consists of various participation segments or windows for trading FX:

  • Intervention Windows – These are specialised FX windows through which the CBN sells FX to Authorised Dealers to fulfil their own FX demands, and those of their Clients
  • Investors’ & Exporters’ FX Window – This FX window was activated in June 2017, and represents the broader FX market, where FX sourced from autonomous sources are traded between Authorised Dealers, Clients and the CBN. This FX window is also the underlying market for the FMDQ Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) benchmark 
  • Bureau De Change (BDC) Market This is an FX market segment which caters to retail and smaller sized FX transactions. It consists of BDC operators licensed by the CBN to trade FX with retail clients to meet approved FX demand.

The USD/Naira ($/₦) currency pair is the most traded in the Nigerian FX market. However, Authorised Dealers also deal FX transactions involving Euros (EUR), Pound Sterling (GBP), Chinese Yuan (CNY), Japanese Yen (JPY), Canadian Dollars (CAD), Swiss Francs (CHF) and South African Rand (ZAR).

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