CBN’s Adjusted N410/$ Rate Under Scrutiny As Website Still Carries Old Rate

metro

4 years ago

Despite confirmation, Friday, February 26, by Godwin Emefiele, Central Bank of Nigeria (CBN) governor of adjustment of naira to N410/$1 at official market, the Bank’s official website still carries exchange rate of N379/$ as at Saturday, February 27.

However, the bank indicated that the reflective rate was as at Friday, February 26.

But, some analysts say at the weekend that the devaluation, orchestrated by CBN and government to rake in more monies in the local value into the national treasury was as a result of shortage of foreign exchange.

This is even as more concerted efforts are being intensified to boost exports in order to earn the foreign exchange.

In fact, the development did not come as a surprise to most analysts as the exchange rate between the naira and the dollar had been adjusted at the Investors and Exporters (I&E) window where forex is traded officially as it had closed above N400/$1 about two weeks ago.

They also argue that CBN may be working towards aligning with Non-Deliverable Forward (NDF) target rates it recently approved.

For instance, CBN had on February 2, 2021 revised its one-year Non-Deliverable Forwards (NDF) for which it intends to settle foreign exchange futures contracts.

Consequently, in the contract which terminated on February 24, 2021, the CBN priced the dollar at N412.14, compared to the average price of N395/$1 traded at the Investors and Exporters (I&E) window.

Several days later, the exchange rate at the NAFEX market started depreciating initially touching N397/$1 before it crossed N400/$1 on February, 9.

Justifying the adjustment at a special summit in Lagos on Friday, Emefiele said the drop in crude oil earnings and the associated reduction in foreign portfolio inflows significantly affected the supply of foreign exchange into Nigeria.

He said, “In order to adjust for the decrease in the supply of foreign exchange, the naira depreciated at the official window from N305/$ to N360/$ and now hovers around N410/$.’’
Beside raking in much naira monies, it is also believed that the development may pave way for resumption of discussion on the $1.5billion world Bank outstanding loan, since the world financial body is requesting for the reform of tje foreign exchange market with the aim of eliminating the pervasive multiple exchange rates.

However, Vice President, Yemi Osibanjo, promised at the venue of the event that the Federal Government would address the shortage of foreign exchange.
“We have accepted that we need to take a more dramatic step to boost exports in order to earn foreign exchange, ’’ Osinbajo said.

He assured that this will partly be achieved through expansion and promotion of export trading houses, ensure that companies in the special economic zones exported most of their productions, as well as expand the export grant scheme.