CBN bows to market pressure, devalues Naira to 380 per dollar

The Central Bank of Nigeria (CBN) according to a statement that became public Friday, has technically devalued the Naira exchange rate for the dollar on the Investors and Exporters’ (I&E) window to N380.

The Naira has come under increasing pressure in recent days, marked by sharp volatility in the Foreign Exchange (Forex) market, a development that compelled the apex bank to back down from its earlier stance that market fundamentals did not support Naira devaluation.

There was a weak demand for the Open Market Operations (OMO) instruments of the CBN on offer on Thursday, meaning that Foreign Portfolio Investors were uncertain about market situation, statistics from Bloomberg terminal reveals.

“Dear all, kindly be informed that the CBN has moved the rate of FX sales to FPIs from N366.70 to N380.20/$. We will advise as developments unfold,” a directive from the apex bank says.

CBN was compelled to take the new stand after regulatory strategies such as penalising culpable market operators and even encouragement to check illegal activities in the Forex market could not stabilise Naira exchange rate to the dollar at N360.

Last week, Bureau de Change (BDC) operators variously adopted rates ranging between N405 and N420.

With the beginning of the new rate, the CBN will offer dollar to the BDC at N378 with the expectation that it would be sold at N380.

Aminu Gwadabe, President, Association of Bureaux de Change Operators of Nigeria disclosed that the harmonisation of different rates became imperative on the need to sustain market confidence.

He believed the decision would prove effective in curbing illicit activities among operators and speculators by making it hard for them to make profit.

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Mr Gwadabe affirmed it was unfair for operators to obtain the dollar at below N360 and sell it at rates between N370 and N375.

He said “there is a circular on it; we are to be buying at N378 and sell at N380.”

Citing the fact that international travel and the volume of importation have declined considerably, Gwadabe debunked the claim that exchange rate had been on the rise because of increasing demand.

“The situation cannot remain like this; things will improve. If coronavirus goes, we will get over it,” he noted.

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