Naira falls sharply at retail market over pressure to harmonise forex rates

Naira fell 5.5% on Tuesday against the United States’ dollar on the official market, four days after the Central Bank of Nigeria weakened it by selling the hard currency to lenders at a lower rate in a move to converge rates offered by the Investors and Exporters window.

Nigeria has been under pressure from multilateral lenders like the International Monetary Fund and the World Bank lately to unite its multiple exchange rates, which pundits believe would help foreign investment.

Nigeria’s prayer for a $3 billion credit lifeline from the World Bank is expected to be honoured in months ahead.

Zainab Ahmed, Minister of Finance, Budget and National Planning, has also pressed for a harmonised exchange rates regime to generate more naira from Nigeria’s oil receipts.

The latest interventions in the currency mark the second time in four months the central bank would weaken the official rate. It devalued the retail forex rate in March.

Read also: CBN mopped up N122bn from banks before devaluing Naira at retail forex auction

Naira declined N380.50 in off-market trades from N360.50 a session before, traders said.

The apex bank, which is Nigeria’s main forex supplier, asked lenders last week to bid for dollars at N380 to a dollar, upping it 5.3% above its official rate.

At the Investors and Exporters window, Naira traded at N387.70 to a dollar. However, it was quoted lower at N460 on the black market.

Nigeria has used multiple forex rates to manage dollar demand following the oil crash. However, dollar scarcity has resulted, crippling growth.

Naira has been taking a bashing from the coronavirus crisis and the slump in oil prices, widening the divide between the spot and black markets.

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