CBN devalues naira by 5.54%

After several months of speculations, the Central Bank of Nigeria (CBN) has finally devalued the naira at the official market by 5.54 per cent.

The devaluation of the local currency raised the exchange to N381/$1 data on the website of FMDQ OTC Securities Exchange, the Lagos-based platform that oversees foreign-exchange trading, showed.

The CBN is yet to issue a statement on the new rate. But a check at the CBN’s website showed the old rate of N360 to dollar, was still there as at 9pm on Tuesday. The CBN website was last updated on July 3.

Ahead of the devaluation, the CBN, the biggest forex supplier- had last Friday asked commercial banks to bid for dollars at N380 per dollar, five per cent above previous official rate of N360. The naira was exchanging at N461 to dollar at the parallel market, which is N101 above the official rate.

The currency depreciation comes after Governor Godwin Emefiele announced last month that the bank plans to unify its multiple exchange rates to improve the transparency of its currency-management system.

The apex had also devalued the currency in March, when it adjusted the official peg against the dollar to N360 from N307. However, Emefiele said at the time the move was “an adjustment of price and not a devaluation of the currency.”

Investors and the International Monetary Fund (IMF) and World Bank have long called for Nigeria to merge its multiple exchange rates, saying the absence of a single rate creates confusion and deters foreign investment.

The multilateral institutions insisted that with drop in foreign exchange reserves and decline in Nigeria’s dollar earnings over fall in crude oil prices, Nigeria had no option but to devalue its currency.

Analysts insist that with Tuesday’s new official rate for the naira, the apex bank is finally bringing all the rates together, signposting unification of the naira as demanded by the IMF and World Bank, before granting a $3.4 billion loan to Nigeria few months back.

Foreign exchange traders on Monday showed signs of anxiety and cautious as they avoided speculative bids, awaiting CBN’s decision on the local currency.

Traders on Tuesday refused to offer quotes  on official foreign exchange market after apex bank allowed naira to weaken by five per cent at last auction.

“No quotes for the naira were available on Nigeria’s official market on Monday after the central bank allowed the currency to weaken five per cent at a retail auction in a move to unify the currency’s multiple exchange rates,” dealers said.

Currency traders refused to quote prices for the naira amid confusion about the impact of the central bank’s adjustment.

The apex bank has continuously intervened through its periodic supply of dollars in the forex market, offering an average of $100 million weekly via the Secondary Market Intervention Sales (SMIS) Wholesale Window to small