The Central Bank of Nigeria has revised the Naira-Dollar exchange rate for one of its forex windows. A dollar is now being sold for ₦380 at the Investors and Exporters (I & E) window of the country’s foreign exchange markets.
The new regime replaces the previously existing rate of ₦360/$1.
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In a circular issued to operators in the industry, the apex bank announced that it would be supplying dollars to them at the rate of ₦378 to a dollar and that they were to sell to investors and importers at ₦380/$1.
This effectively unifies two existing rates, the Bureaux De Change (BDC) and I & E; both will now sell dollars for the same price.
The rate adjustment comes just a week after the CBN insisted that it would not be devaluing the local currency. Isaac Okoroafor, the bank’s director of corporate communications, had insisted that market fundamentals did not support devaluation.
Okoroafor had also lamented that speculators were driving panic at the currency markets, and warned that they would be “charged for economic sabotage.”
Despite this pronouncement, speculative activity has continued, and pressure has mounted on the naira. The latest move by the CBN may signal a slight shift in its stance, perhaps signaling a failure of its moral suasion.
The Vanguard quotes an unnamed official of the bank as saying that the rate change was a reaction to “developments foisted on the market by COVID-19.”
The President of the Association of Bureaux De Change operators, Aminu Gwadabe, has predicted that the pressure on the Naira would ease off after the coronavirus pandemic abates. He claimed that the recent rise in the exchange rate was not driven by real demand from importers.
Analysts have blamed the slide in the value of the Naira against the dollar on the recent oil price crash. Concerns have mounted that Nigeria may not gain enough forex from its oil exports to keep the Naira steady against major international currencies.
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As at the time of this report, Brent crude traded at $26 per barrel at the international markets. This is down more than 50% from the $63 that it averaged in January.
The CBN has previously maintained a commitment to defending the naira, but doubts have grown about its ability to carry on with this policy.
On Wednesday, the bank announced a ₦1.1 trillion intervention fund to sustain the Nigerian economy. Its governor, Godwin Emefiele, said the fund would support critical industries that may be affected by coronavirus pandemic.
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