Naira suffers heavy falls after IMF calls for Nigeria to abandon exchange rate

Following the call by the International Monetary Fund (IMF) for Nigeria to remove official exchange rates, the value of Naira depreciated at the official and black markets on Tuesday.

Data from FMDQ securities showed the exchange rate of the Naira to the United States Dollar further depreciated at the Investors and Exporters (I&E) by 17 kobo or 0.04 per cent to settle at N416.67/$1 as against N416.50/$1 it ended on Monday.

The depreciation of Naira happened despite less pressure at the market as participants on Tuesday transacted $74.56 million compared with the $125.1 million achieved a day earlier.

This indicated that the turnover for the trading session went down by 40.4 per cent or $50.54 million.

It was a similar performance at the interbank market for Naira as it depreciated to N417.25 as against N417.05 it exchanged on Monday data from CBN website showed.

But there was respite against the Pound Sterling as it appreciated by 54 kobo to N565.42/£1 from the previous day’s N565.96/£1.

Naira also appreciated against the Euro by N1.66 to close at N476.75/€1 compared to N478.41/€1 it finished on Monday.

But the black market was a heavy fall as news of IMF calling for further devaluation spread.

Merchants at the black market from Tuesday afternoon to the evening increased the rate for those looking to buy dollars to N574 from N565/$ it exchanged a day earlier.

Read also: Naira falls again to US dollar

Meanwhile, IMF advice for the Naira exchange rate to be removed was contained in its Article IV consultation report on Nigeria, published on Monday.

According to the Fund’s statement on the report, IMF wants the official exchange rate to be removed to make way for a unified and market-clearing exchange rate to help strengthen Nigeria’s external position, taking advantage of the current favourable conditions.

IMF noted that exchange rate reforms should be accompanied by macroeconomic policies to contain inflation, structural reforms to improve transparency and governance, and clear communications regarding exchange rate policy.

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