DEVALUATION: CBN Updates Website To Reflect Official Exchange Rate Of N360/$1

The Central Bank of Nigeria has devalued its official exchange rate from N307/$1 to N360/$1. CBN has now reflected this change on its website signaling a confirmation of official devaluation of the local currency.

However, the bank is yet to issue a press release to this effect.

The implication is that CBN has now officially devalued Naira by 15% moving from N307/$1 to N360/$1.

 Depreciation at the “market-determined” I&E window is 5% having moved from N360/$1 to N380/$1

On Friday, CBN sold dollars to banks at N380/$1 in a move signifying a devaluation of the currency. Banks trading at the Investor and Exporter (I&E) window bought dollars at N360/$1 from the CBN on the same day, 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.

Besides the website update, a letter from the CBN to banks also informed them of the new exchange rate for dollars flowing from the International Money Transfer Operators (IMTOs). According to the CBN, IMTOs will sell to banks at N376/$1 while banks will sell to the CBN at N377/$1. The CBN will sell to BDC’s at N378/$1 while the BDC’s will sell to end-users at “no more than” N380/$1.

The development may have confirmed that CBN has now made an apparent u-turn after it said initially that the “market fundamentals do not support naira devaluation at this time” detailing reasons why it did not need to devalue.

Oil prices fell to under $20 on Friday before climbing back up to settle at $23 per barrel. Nigeria’s Bonny light trades at $26 while the benchmark Brent crude trades at $29 per barrel. In response to the crash in oil price, Nigeria has announced a cut to its 2020 budget by N1.5 trillion as it faced the reality of a potential drop in its revenues.

It was further learnt that recent developments are causing state governments to be jittery as their ability to sustain salary payments are being threatened. This is even as reduction in their federal allocations“FAAC” is being anticipated.