CBN to tolerate naira weakening in new fx window, but won’t devalue it’s official rate

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Governor Godwin Emefiele told senior bankers that he would tolerate the naira weakening in the window, which starts today, according to a person who attended meetings with the policy maker over the past two weeks.

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While the currency may depreciate to its black-market level, the central bank probably won’t devalue the naira’s official rate, the person said, declining to be identified because he wasn’t authorized to speak publicly.

Nigeria’s central bank will let the market determine the naira’s rate in a new foreign-exchange window for portfolio investors as the nation struggles to revive its economy amid a dollar shortage.

FX Window

The foreign-exchange window will be for bond and stock investors as well as exporters, the central bank said in a statement late on April 21. The FMDQ OTC Securities Exchange, the Lagos-based trading platform, will publish the rate for the window, know as Nigerian Autonomous Foreign Exchange Rate Fixing, or NAFEX, around noon each day.

The Abuja-based regulator said it “reserves the right to intervene” in the window.

The naira has traded at around 315 per dollar on the interbank market since August. The currency’s black-market rate plummeted to a record 520 against the greenback in February, but recovered to 385 after the central bank sold more than $2 billion in forward contracts.

Nigeria has suffered from a dearth of foreign exchange after the price of oil, its main source of revenue, collapsed. While crude prices have since risen, some investors say the central bank’s capital controls and attempts to stop the naira from weakening are exacerbating the crisis.

The nation’s economy contracted last year for the first time since 1991.

 

 

Godwin Okafor
Godwin Okaforhttps://naija247news.com
Godwin Okafor is a veteran Financial Journalist, Internet Social Entrepreneur, and the visionary Founder of Naija247news Media Limited. With an extensive career spanning over 16 years in financial journalism, Godwin possesses a wealth of experience that seamlessly bridges both traditional and digital media landscapes. His journey in journalism commenced at Business Day, Nigeria, where he laid the foundation for his prolific career. In 2010, Godwin took a bold step by founding Naija247news Media, a platform that has since become a prominent player in delivering timely and accurate news. Educationally, Godwin Okafor holds a Bachelor's degree in Industrial Relations and Personnel Management from the prestigious Lagos State University, Ojo, Lagos. His commitment to continuous learning led him to the Lagos Business School, where he further honed his skills. Additionally, he is recognized as a Fellow of the University of Pennsylvania, having successfully completed the Wharton Seminar for Business Journalists. Throughout his illustrious career, Godwin has earned acclaim by winning numerous journalism awards, a testament to his dedication to excellence in reporting. Beyond his role as a Financial Journalist, Godwin Okafor wears the hat of the Chairman at Emmerich Resources Limited, the publishing entity behind Naija247news. His visionary leadership has played a pivotal role in shaping the media landscape and establishing Naija247news as a trusted source of information. Godwin Okafor's multifaceted expertise, commitment to journalistic integrity, and leadership in the realm of business journalism underscore his influential presence in both the media and entrepreneurial spheres.

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