Nigeria’s CBN devalues Naira, downgrades Exchange Rate To N380/$1


The Nigeria’s apex bank, Central Bank of Nigeria (CBN) Monday adjusted the exchange rate on its official website to N380/$1 from the N379 per dollar that it has had on the site since August.

Subsequently, the apex bank also adjusted its official selling exchange rate to N381 per dollar from the former the N380/$1.

While the CBN has not issued any statement on the slight adjustments, analysts believe it is in line with its exchange rate unification moves.

The CBN had on August 7 altered the official exchange rate on its website to N379/$1 from the N361 per dollar that the site had reflected since March 20, this year.  It also adjusted the official selling  exchange to N380/$1 from N361 per dollar.

Prior to the adjustments in August, the regulator had on July 3, adjusted the naira’s rate from N360/$1 to N380/$1 at the Secondary Market Intervention Sales (SMIS).

Similarly, on July 7, the regulator adjusted the exchange rate at the Investors and Exporters’ (I&E) window, also known as NAFEX, according to data on FMDQ website, by 5.54 percent to N381 per dollar from N361/$, sparking speculations that it was set to officially unify the exchange rates.

Furthermore, in announcing the resumption of dollar sales to Bureaux De Change (BDCs) in late August, which had been suspended in March due to Covid-19 restrictions,  the CBN unveiled what it described as, “applicable exchange rate for the disbursement of proceeds of International Money Transfer Service Operations( IMTOs) for the period Monday, August 31 to Friday, September 4, 2020.”

Specifically, the regulator directed that the rates for the period will be as follows: “IMTSOs to banks – N382/$1; Banks to CBN — N383/$1; CBN to BDCs — N384/$1 and BDCs to end-users – Not more than N386/$1.”

In the wake of acute forex scarcity, occasioned by the slump in the price of oil (the commodity that accounts  for over 90 per cent of Nigeria’s export earnings), the  external reserves started heading south since the first quarter of 2020, thus making it difficult for the  apex bank to be able to adequately meet forex demand.

With the naira coming under pressure in the forex markets, the CBN also came under pressure from the World Bank and International Monetary Fund (IMF) to unify the country’s multiple exchange rates.

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