By Omoh Gabriel
As the COVID-19 continue to take its toll on the global economy and fall in oil prices, the Cenral Bank of Nigeria CBN has allowed the exchange rate at the Investor/Exporter window to reflect market realities. The CBN sold the dollar at the window at N380 to the dollar thus technically depreciating the currency. The Naira drop in value at the Investors and Exporters (I&E) trading window from N366.70 to N380.20. Although CBN officials are keeping sealed lips on the matter, an unofficial source at the Central Bank of Nigeria, said “we allowed the Naira to mirror developments in the market as determined by in the Investor/Exporters window. All I am saying is that there is adjustment in the Investor/Exporters window of the market to reflect development foisted on the market by the covid-19 crisis.”
The move is expected to sustain foreign portfolio investors’ interest in Nigeria’s financial instruments. Nigeria like other countries mainly dependent on crude oil to fund expenditures have been under tremendous pressure since the price of the commodity crashed from $67pb to about $27pb. The CBN still operates multiple exchange rate windows, the source added. The CBN’s website has N307-$1 as the official rate, while it still sells to licensed changers at somewhere around N357-$1. Banks trading at the Investor and Exporter (I&E) window bought dollars at N360/$1 from the CBN on Friday March 20, 2020. The I&E window is the official market where forex is traded between banks, the CBN, foreign investors and businesses. The central bank typically buys or sells in the market as part of its intervention program.
The central bank in a press release last week said that the “market fundamentals do not support Naira devaluation at this time” detailing reasons why it did not need to devalue. Having sold at N380 at the I&E window the CBN has officially accepted the exchange rate has now depreciated officially in line with a drop in oil price. The Brent crude fell below $30 this week as oil prices continued their recent slide in the wake of the price war between Saudi and Russia. The CBN however still retain the N307/$1 as its official exchange while the exchange rate is still N366/$1 for personal travels. Nigeria maintains a multiple exchange rate regime with forex sold at several windows.
CBN adjusted exchange rates