Floating The Naira 2 By Reno Omokri

Just in case you are wondering what the I and E window is, it is the platform where the value of the Naira will be set from now. It stands for Investors and Exporters Window. The I&E window allows Investors, Exporters, Importers and End-users to meet at a market to haggle and bargain over the value of the Naira vis a vis other internationally traded world currencies.

So, for example, it allows foreign airlines who want to get their money out of Nigeria to use the Naira you paid to them to buy your ticket abroad to buy Dollars from Shell Petroleum Development Company, who need Naira to pay their local staff.

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Basically, several investors, exporters and importers haggle, like how you price garri at the market. The person with the cheapest priced garri gets the most customers, and other garri sellers in the market are then forced to sell their own garri at the same or lower price, or they will not have any customers, and that is how the price for garri is set.

The only role the Central Bank of Nigeria now plays in the I and E window is to place a ₦1 cap, which means that you can only resell the forex that you bought with a ₦1 profit. Meaning that if you bought Naira at, say, ₦664 at the I and E window, then you cannot sell it to your end users for more than ₦665.

So, for example, and for now, FirstBank, UBA, GT Bank, or any other investment bank cannot sell you dollars at a profit of more than ₦1 for each dollar.

And since the I and E window is now the only marketplace to buy and sell foreign exchange with Naira at a wholesale rate, it will no longer be possible for Bureau de Changes to offer you a rate that is better or worse than the rate you would get at a bank. The only thing they can do is to resell to you at between 1 to 99 kobo less than the ₦1 bridging gap.

I hope this helps you understand how things will work henceforth.