Nigeria inches closer to exchange rates unification as CBN adjusts rate to N379/$

Nigeria’s aspiration of harmonising its various exchange rates has been brightened by the recent modification of the Central Bank of Nigeria (CBN)’s spot exchange rate, data from the apex bank’s website showed on Monday.

Naira was quoted at N379 to the United States dollar on Friday, N19 weaker than the N360 rate of exchange adopted by the regulator in March.

The latest rate is just N2 lower than that used at the secondary market intervention sales window, where importers bid for foreign exchange by means of letters of credit and Form M, itself an import monitoring documentation.

Equally, it is N7 smaller than the rate of the over-the-counter spot market rate, mostly used by investors and exporters, which stood at N386 on Friday.

The CBN has been making a series of devaluation efforts to consolidate Nigeria’s multiple exchange rates, which has created arbitrage opportunities and grounds for speculation for highly connected traders, around the one used on the over-the-counter spot market following pressures from the World Bank and the International Monetary Fund (IMF).

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Analysts said the policy shift would attract foreign investors, a majority of whom exited the economy in the first half of the year.

The country is hoping its prayer for a $3 billion budget support facility from the World Bank will be answered this month, a probable reason for the latest currency adjustment move.

Nigeria would take steps towards “full exchange rate unification and greater exchange rate flexibility” in a bid to preserve foreign exchange reserves and avert economic dislocation, government vowed to the IMF in May before obtaining a $3.4 billion rapid financing credit from the multilateral lender.

There remains, however, a yawning gap between these rates and that of the black market, (which the CBN called ‘illegal’), which closed at N475 per dollar on Friday, according to abokifx.com.

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