On Friday, following news that the Central Bank of Nigeria (CBN) had adopted a flexible exchange rate as reference for government transactions, the official and the official market reacted, as Naira weakened further.
Ripples Nigeria had reported that the CBN deleted from its website the band of N379 to a dollar used as basis for budget preparation and other official transactions since last year.
The move confirms CBN will now adopt the exchange rate for investors and exporters known as Nafex, a rate that is different from Bureau de change and also the parallel market rate which CBN considers illegal.
CBN had last month denied such plan to adopt, claiming Journalists misinterpreted the Minister of Finance, Zainab Ahmed that the Nigerian government had adopted the flexible exchange rate.
After Friday’s trading, as expected, data posted by FMDQ showed naira at the investors and exporters window hit a record low of 426.67 against the dollar before closing at N411.67.
The closing rate represents 0.10 percent or N0.42 devaluation from N411.25 to a dollar it exchanged on Tuesday.
This occurred as the foreign exchange supply increased significantly to $203.42 million from $98.33 million recorded on Tuesday.
The black market also reacted to the CBN officially weakening the Naira.
According to data posted by abokifx, the parallel market exchange rate moved by 0.20 percent or N1 to close at N484 from N483.00 it has traded since last week.
By implication, the difference between the parallel market and the official market exchange rates increased to N72.33 on Friday from ‘N71.75 on Tuesday.
What this indicates is that if the central bank indeed plans to unify Nigeria exchange rate similar to other African countries, it may have to weaken the official rate further in the nearest future.
Join the conversation
INVESTIGATION… Ten years after, communities count losses as AfDB, Cross River govt abandon road project
Ten years after the Cross River State government and African Development Bank (AFDB) jointly awarded the Yahe-Wanokom-Wanikade-Benue border road for...
INVESTIGATION….N.3bn down the drain: Why water projects for Enugu communities don’t work
In this concluding part, ARINZE CHIJIOKE talks about some of the projects that are serving the people and how various WASH programmes have failed to tackle...
INVESTIGATION…PARKVIEW ESTATE: Exclusive images of how billionaire property developer incurred Lagos govt‘s anger
Many have seen the demolished building, but not many know the circumstances that led to the teardown of the about...
INVESTIGATION… N.3bn down the drain, as Enugu communities suffer from dry taps
In November 2020, three organizations and the Enugu State government celebrated the completion of N300 million worth of projects that were expected...
INVESTIGATION… How herdsmen crisis compounds woes of already deprived Ogun communities
Earlier in January, the Nigerian media space was awash with reports of violence between herders and farmers across the country....