CBN targets single FX rate for naira devaluing to N380.2/$ from N366.7/$

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The Central Bank of Nigeria has moved the FX sales rate to FPIs to N380.2/$, from N366.7/$, in a move that suggests a technical devaluation of the naira, information available from Bloomberg terminal shows.

An analyst in Lagos revealed that CBN sold the dollar at N380.2 on the I&E window today, Friday.

The official rate is still N306/$ but BusinessDay expects an announcement of an adjustment to that rate by Tuesday next week.

Statement from The CBN spokesman, Isaac Okorafor confirmed the development Friday.

The move is expected to sustain foreign portfolio investors’ interest in Nigeria’s financial instruments.

Nigeria like other countries mainly dependent on crude to fund expenditures have been under tremendous pressure since the price of the commodity crashed from $67pb to about $27pb.

Nigeria’s central bank will migrate to a single exchange rate for the naira by collapsing the multiple exchange rate policy that determined the value for the local currency, people with direct knowledge of the matter said.

The West African nation will merge the official rate, the rate for importers and exporters and rate for foreign-exchange bureaus, among others, according to the people who asked not to be identified because they are not authorized to speak publicly about the matter.

“Today we allowed the rate at the importer and exporters (I&E) window to adjust in response to market developments,” said a senior central bank official, confirming the bank changed the rate at the window for foreign investors to 380 naira per dollar from 366 naira per dollar.

Nigeria operates a system of multiple exchange rates in a bid to control demand for dollars. The system, which has been criticized by the International Monetary Fund, has kept the official rate at about 305 naira per dollar. It uses this to supply cheap foreign exchange to government departments and select companies, including fuel importers. It created an importers and exporters window in 2017, in which the naira was allowed to weaken after an economic contraction in 2016.

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