The Central Bank, (CBN) has devalued the naira, making it the third time this year
as the regulator struggles to stem demand for dollars amid lower than anticipated foreign-currency inflows.
CBN adjusted the rate licensed bureau de change operators can sell the local currency to 392 naira per dollar from 386 naira previously, according to a circular to dealers on Monday. Traders will purchase the U.S. currency at 390 naira from 384 naira, it said, adding that international money transfers will be exchanged at the banks at 388 naira per dollar from 382 naira.
But the Bureau De Change operators are bent on making the difference following the devaluation, according to a memo from the association seen by the platform.
“CLARIFICATIONS TO ALL MEMBERS NATION WIDE.
Following the CBN adjustment of our weekly bidding rate from #384/$ to #390/$ by the CBN from today.
Members are advised to make up the payment of the Differncials of #60k on or before monday 30/11/2020 by 1pm.
Pls,ensure compliance and be guided appropriately.
ABCON NATIONAL EXCOS.“
The devaluation follows two others in March and July this year as Africa’s largest oil producer continues to contend with lower than budgeted crude prices along with the economic turmoil that followed the global coronavirus pandemic.
This is as the Naira hit a record low of N600/$1 on the futures for 5-year settlement on Friday, as the severity of forex scarcity becomes more intense, according to a report from Reuters.
Nigeria has seen a significant drop in foreign exchange inflows, with crude exports accounting for more that 90% of the country’s foreign-exchange earnings.
The low greenback liquidity at the official exchange window, where the CBN maintains a largely inflexible rate, has increased demand in the parallel market where it is freely determined.
The naira traded at 500++ versus the dollar on Monday, its lowest since Feb. 22, 2017, according to abokifx.com, a website that collates parallel market data. The rate is 22% weaker than the current official rate of 388.54 per
However, the mallams hawking the greenback at the popular Allen, Ikeja, Lagos as at Monday quoting between N505 and N506 to the dollar.
Whatsapp message sent to Aminu Gwadabe, ABCON president for his cements was not responded, though he read the message.
However, a member of the association said the economy might witness free fall of the naira following this development, but added that a clearer picture will appear on Tuesday when CBN would officially sell the foreign exchange to them.
Godwin Emefiele, CBN Governor had told his audience at the bankers night at the weekend in Lagos that the regulator was doing all it can to ensure the stability of the market.
“Like other emerging market countries and countries reliant on oil exports, the decline in crude oil earnings as well as the retreat by foreign portfolio investors significantly affected the supply of foreign exchange into Nigeria. In order to adjust for the decrease in supply of foreign exchange, the naira depreciated from N305/$ to N360/$ and subsequently to N380/$. With the decline in our foreign exchange earnings and successive exchange rate adjustments, the CBN has continued to implement a demand management framework, which is designed to bolster the production of items that can be produced in Nigeria, and aid conservation of our external reserves.
“Due to the unprecedented nature of the shock, we continued to favour a gradual liberalization of the foreign exchange market in order to smoothen exchange rate volatility and mitigate the impact which, rapid changes in the exchange rate could have on key macro-economic variables. This we believe is in line with international best practices in countries where managed float arrangements are in operation. At the same time, measures are being taken by the authorities to improve our non-oil exports and other sources of foreign exchange.
“These measures have helped to prevent a significant decline in our reserves. Our external reserves currently stand above $35 billion and are sufficient to cover 7 months of import of goods and services,” Emefiele said.
