Uncertainty Over Official Foreign Exchange Rate As CBN Removes N379/$1 From Website

Forex Market
Forex Market

Nigerians have been kept in the dark over what the official foreign exchange rate is today, as the apex financial institution in the country, (the Central Bank of Nigeria) removed the exchange rate of N379/$1 from its website.

It is pertinent to note that since the CBN adjusted the exchange rate in August 2020, it has retained the exchange rate of N379 per dollar on its website, implying an official exchange rate. Historically, analysts have referenced this rate as the official rate for the country.

However with recent development and given the fact that the CBN is yet to comment on the matter, Nigerians who have spoken to NaijaBusiness.com have expressed their worries and fears over the worst. As at the period of writing this, checks into the website of Nigeria’s leading securities and exchange firm, FMDQ revealed that the N379/$1 is still maintained by the firm.

One major source of worry for most Nigerians who are sceptical about the recent development is the fear of a possible devaluation by the apex bank. Experience have shown that this fear have been long maintained by Nigerians, despite CBN denial and rejection of such plans. NaijaBusiness.com understands that Nigeria has been under serious pressure to move from its managed float policy to a flexible exchange regime, as part of the condition to grant request for ‘’emergency financial assistance’’ of $3.4 billion under its Rapid Financing Instrument.

READ: CBN Announces Indefinite Extension Of ‘Naira4dollar’ Scheme

Does the removal imply possible devaluation?

Analysts have explained that the removal of the erstwhile N379/$1 does not necessarily portend or imply possible devaluation. It is just a technical way of ensuring convergence between the disparity in parallel rates and the official rates. The action is viewed as a deliberate means of achieving near perfect market convergence rates.

It is an open secret that Nigeria practises multiple exchange regimes such as NAFEX, SMEIS and BDC, however the NAFEX rate is the official exchange rate recognized for transaction between parties. In this light, experts have predicted the continuation of this trend.

Recall that CBN had recently announced the indefinite extension of its ‘Naira4 dollar’ scheme