CBN Devalues Naira by 15% Amid Low Oil Prices, Weak Reserves

• CBN Devalues Naira by 15% Amid Low Oil Prices, Weak Reserves

As reported by Investors King on Friday, the Central Bank of Nigeria (CBN) has updated the official foreign exchange rate of the Naira on its website from N307 to a US dollar to N360 to reflect changes in macro fundamentals.

The apex bank had said current economic fundamentals do not dictate devaluation despite experts projecting at least 10 percent devaluation by the second quarter of the year due to weak foreign reserves and falling oil prices.

Investors King reported that the CBN sold the US dollar at N380.2 to foreign portfolio investors, in a move that suggested that the apex bank has finally realised it could no longer sustain the Naira at the current exchange rate given the current economic situation.

While the CBN has not released an official statement acknowledging the new exchange rate, the apex bank has updated the foreign exchange rate on its website on Friday as shown below.

The nation’s foreign reserves declined to 29 months low of $35.9 billion this month amid government inability to sell Nigerian crude oil and rising uncertainty as the number of coronavirus cases surged.

In a recent letter to Deposit Money Banks (DMBs), the CBN has already acknowledged the changes, saying the International Money Transfer Operators (IMTOs) will now exchange the US dollar to the banks at N376 while the bank will sell to the apex bank with a profit of N1 at N377 per US dollar.

Accordingly, the central bank will sell to the Bureau De Change Operators at N378 per dollar while the BDCs are expected to sell to the public at ‘a rate not more than’ N380 per US dollar.

On the Investors and Exporters Forex Window, the Naira depreciated by 5 percent from N360 a US dollar to N380, the same rate it was exchanged on Friday.