The last one year has been a tough one for the naira which started the year on a shaky ground. But several policy initiations by the Central Bank of Nigeria (CBN) have curbed foreign exchange (forex) volatility and put the local currency back on recovery path. The coming of Investors’ and Exporters’ (I&E) Forex window and the continued dollar interventions by the CBN have ensured that forex demands at the retail end of the market are settled.NANCY OKON, a civil servant based in Lagos, planned her annual vacation in the United States. Sadly, her holidays were cancelled after it dawned on her that getting the needed dollar for the event would be difficult and expensive. That was in January when the naira exchanged at N485 to the dollar and getting it was even more tasking because of acute shortage of the greenback.By February, the exchange rate had climbed to all time high of N520 to the dollar at the parallel market and many parents abandoned their children in foreign schools because of the difficulty in accessing foreign exchange (forex) from the market. Those experiences persisted till April when the Central Bank of Nigeria (CBN) introduced the Investors’ and Exporters’ (I&E) Foreign Exchange window that allowed foreigners and investors to pump in dollars into the economy at a rate of their choice. The pricing for dollar was then determined by market forces.The speculators lost over N700 million in March, as the CBN sustained its dollar interventions in the interbank market. The losses grew to over N1 billion in April, after the I&E Forex Window was opened to deepen dollar liquidity in the economy.The economy has also enjoyed major inflow of forex in recent months with over $11.3 billion recorded in the I&E FX Window. The I&E Forex window, also called willing-buyer willing-seller window, allows foreign investors to find buyers for their dollars at a mutually agreed price. The CBN controls about 15 per cent of all the transactions carried out in the window.The coming of I&E Forex window was followed by continuous interventions by the CBN which enabled banks and bureau de change (BDC) operators to meet forex demands at the retail end of the market. The naira now exchanges at N360 to dollar at both the BDC and parallel market rates while the official rate for the local currency stood at N306 to dollar. Aside establishing the I&E Forex window, the CBN also opened a special forex window for Small and Medium Enterprises (SMEs). The window, which allocates $20,000 per business per quarter, helps the SMEs import “eligible finished and semi-finished items” needed for their businesses. The CBN said the bank’s special intervention was necessitated by its findings that many SMEs were being crowded out of the forex space by large firms.The CBN Governor, Godwin Emefiele, had earlier called for a change of lifestyles among Nigerians to sustain naira’s recovery against the dollar. He said in a campaign shared by the bank’s spokesman Isaac Okorafor: “The size of Nigeria’s reserves and the value of the naira critically depend on our lifestyles and on the value and types of imports we allow into the country.”Emefiele’s message implied that a change in the consumption pattern from foreign to indigenous goods would impact positively on the value of the local currency. Analysts said the CBN’s assurance to stakeholders that it will continue to intervene in the forex market, a promise it has kept for more than seven months, stabilised the market. But stability is bad news for forex speculators. They prefer volatility which makes them to declare more profits. The Head Currencies Market at Ecobank Nigeria, Olakunle Ezun, said the forex market has lost its drive for profitability and is no longer exciting for players. He said the boom time for forex dealers was over after the CBN kept its dollar intervention promises. “In terms of forex business, it is not as exciting as it used to be. What makes the market exciting is volatility. The operators are not always happy when market becomes stable, because their profit margin drops. The profit-taking opportunity in the market is very lean at present and so are the turnover and spread,” he said.He said Nigeria’s currency crisis was triggered by the dip in crude oil prices, which adversely affected Nigeria’s foreign reserves and created chronic dollar shortages. It was the need to curb these dollar shortages and stabilise naira against world currencies that prompted the CBN to regularly inject dollars into the market to narrow the spread between the official and black market rates. This measure has not only led to the convergence between parallel and black market rates, but has chased currency speculators out of the market.