Report: Central Bank Signals Weaker Official Naira Rate

budgetThe Central Bank of Nigeria, Abuja, Nigeria
  • Report: Central Bank Signals Weaker Official Naira Rate

The Central Bank of Nigeria (CBN) has signalled it will allow the naira to weaken past its official rate as it gradually unwinds its regime of multiple exchange rates, Bloomberg cited data on the central bank’s website to have shown.

The central bank stopped publishing the fixed naira exchange rate on its website and it now says that the rate will be “market-determined.’’

The central bank used to have an official rate as strong as N305 per dollar. That rate was used to ensure that some traders including, fuel importers, got cheap dollars. A move toward a market-determined exchange rate will be welcomed by investors, who have long accused the government of some level of capital controls and bemoaned the system of multiple exchange rates.

The central bank is in talks with other agencies to move to a single rate for the nation’s currency, the head of the Nigerian Investment Promotion Commission, Yewande Sadiku, had said last month.

“Putting that on the website means the central bank is gradually moving towards a single exchange-rate window,” Kunle Ezun, a currency analyst at Ecobank Transnational Inc in Lagos told Bloomberg.

“It is making the exchange rate more liquid to attract more inflows.”

Nigerian Customs Service told importers recently, to pay for duties at a weaker rate of 326 naira per dollar from 306 naira citing a directive from central bank, according to Jonathan Nicol, President of Shippers Association of Lagos State.

Calls to central bank spokesman Isaac Okorafor didn’t connect and there was no reply to text messages. The interbank rate was 0.2 per cent weaker at N360.43 to a dollar yesterday.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya

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