The Central Bank of Nigeria (CBN) has debunked the claim that it has devalued the naira.
The CBN tweeted, “The CBN did not devalue the Naira,” on Thursday morning.
Daily Trust had reported that the CBN on Wednesday devalued the naira to N630 to $1 from N461.6.
According to a source who spoke to the media house, the dollar was sold at the new rate during Wednesday’s Importers and Exporters window.
Daily Trust reports that on Wednesday, it was sold at the new price on the Importers and Exporters window.
REPORTERS AT LARGE recalls that Minutes after becoming the 16th president of the nation, Tinubu declared in his inauguration speech that “Monetary policy needs a thorough house cleaning. The Central Bank must work towards a unified exchange rate. This will direct funds away from arbitrage into meaningful investment in the plant, equipment and jobs that power the real economy.”
The I&E window and the parallel market have spread greatly, which experts say encouraged round-tripping with Bureau de Change operators.
The CBN has devised several solutions to the problem, including halting all currency sales to BDCs.
President Tinubu met at the presidential palace on Tuesday with the top brass of strategic organisations, including CBN Governor Godwin Emefiele.
Neither the presidency nor Emefiele disclosed the outcome of the briefing after the meeting. However, it was heard that the meeting included the topic of the exchange rate.
The Nigerian National Petroleum Company Limited’s Group Chief Executive Officer, Mele Kyari, and the President also had a meeting. It was learned that the abolition of the petrol subsidy was discussed.
However, according to the Daily Trust report, when the weekly foreign exchange bidding resumed, the apex bank sold the spot rate to banks on behalf of their clients for N631 to a dollar, and most bidders received the total amount they sought.
One of the clients reportedly applied and had their complete request accepted for N631 instead of N461.6.
Prices in the parallel market have also been decreasing due to the shift. According to this newspaper’s research, rates in Abuja and Kano dropped from N750 to a dollar in the morning to N745 by the evening.
In anticipation of a potential shift in exchange rate management when Tinubu assumes office on Monday, the naira declined in the parallel market to its worst level in a year.
According to Umar Salisu, a BDC operator who monitors the data in the nation’s commercial capital, the naira fell to N762 to the dollar on Friday from 775 the day before.
After stabilising for most of this year, the unit has declined significantly in the secondary market since last week.
Since 2020, when the black market rate peaked at N880/$, the market arbitrage—the gap between the official and parallel markets—has grown from N100 per dollar, or roughly 30%, to over N400 per dollar (over 100%).
The International Monetary Fund (IMF) and other development organisations are cautious about exchange rate differences over 5% and caution that doing so could lead to unhealthy manipulation that could undermine other efforts at market stabilisation.
The CBN intervened in the foreign exchange market for around $42 billion between 2020 and 2022 to stabilise the naira. The amount was sold to final customers, including students and tourists, at official rates significantly below the naira’s effective exchange rate.
The CBN’s Financial Stability Report states that the central bank sold $9.2 billion of securities during the first half of 2017.
The second half’s complete data are not yet available. However, given the amount of social and economic activity associated with the second half, it is expected that the annualised value has exceeded that.
The I&E window ended on average at a reduced N447/$, while the black market rate averaged N730/$. With the arbitrage at N283/$, the CBN’s annual foreign exchange subsidy rises to nearly N3.65 trillion.
