CBN DEVALUES NAIRA, ANNOUNCES UNIFIED EXCHANGE RATE

In the face of slumping crude oil prices due to Coronavirus, the Central Bank of Nigeria (CBN) has resumed a weekly rate regulation, with independent money transfer operations ordered to sell to banks at N376/$1 while end-users will get the USDollar at N380. In a communique to all banks and Bureau De Change on Friday, the CBN advised that the BDC to end-user sales of the Dollar should not be more than N380/1USD. This devaluation has come after over three years of push from financial market managers, the World Bank and International Monetary Fund for the local currency to be devalued.

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The apex bank took this decision after all interventions in the market, such as imposing sanctions on errant operators and use of moral suasion to curb illegal forex operations did not sustain the exchange rate of N36m. In a circular to the operators in the sector, the CBN merged the rates at both the Bureau De Change rate and Import & Export window at N380. Asides devaluing the naira, the CBN also adopted a unified exchange rate, and pushed the official rate of the naira to N376 to dollar for International Money Transfer Operators rate to banks; N377 to dollar for banks’ dollar sale to CBN and pegged CBN’s dollar sales to banks at N378.

The CBN also pegged the volume of sale for each BDC at $20,000. The regulatory bank has moved the official rate to N360 to the dollar from N307 per dollar previously and now selling dollar to foreign portfolio investors (FPI) at N380 at the Investors’ & Exporters FOREX window from N366 per dollar previously.

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The BDC operators are expected to buy dollar from the CBN at N378 per dollar, according to a circular sent to the BDC operators by the apex bank.

With this action, the regulatory bank has effectively unified the foreign exchange rates in the market in line with the recommendations of the World Bank and IMF.

“Please be advised that the applicable exchange rate for the disbursement of proceeds of IMTOs for the period Monday, March 23 to Friday, March 27, is as follows,” the CBN circular signed by the director of Trade and Exchange, O.S Nnaji stated.

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There have been speculations in the market in recent times that the CBN may devalue the currency in view of the impact of the Coronavirus and the sharp drop in global oil prices.

Before now, the country had about five different exchange rates; one for offshore investors at I&E window, the other for the official window, another one for the interbank, while the bureau de change operators rate was also different from the rest. The unification of the exchange rate has effectively ended almost three years of multiple exchange rates in the market.