The Central Bank of Nigeria (CBN) is set to effect exchange rate convergence, a move that will end the multiple exchange windows that have been widely criticised over the years.
Banking sources told THEWILL Wednesday that the CBN has told banks that the rate cap has been removed at I & E Window.
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Consequently, banks and customers are allowed to trade freely at any rate subject to N1 spread between buy and sell rate._
Analysts believe that the development will bring the needed transparency in the forex market and address the scarcity that has put pressure on the local currency over the years.
Analysts at Proshare, a market analyst and financial information news medium, told THEWILL that merger will lead to a depreciation of the local currency in the official market, but the parallel market should appreciate.
“We can merge the different official exchange rates. The merging of the rates should, according to Proshare models, lead to a depreciation of the local currency in the official market, but the parallel market should see an appreciation. The official rate could fall to between N600/$ and N650/$.
The parallel market rate should trend down towards this range. Remember most market transactions occur in the unofficial market thereby, mitigating the potential inflationary impact of the official exchange rate adjustment”, it said in a note to THEWILL.