Indications are beginning to emerge that the CBN may well introduce the a dual exchange rate system where the Naira will trade at a fixed price and along a band at the interbank. According to media sources, the CBN is likely to devalue the naira at the official rate as well as allow the interbank market to sell at a “market determined” rate that will like trade along a band. It is sort of like what is currently obtainable in the downstream sector where petrol sells between a price band of N135 – N145.
Black Market operators interviewed by Bloomberg have also opined that when the CBN eventually devalues this week the black market rate for the dollar may drop to as low as N300 due to increased supply.
“The naira might trade around 300 to a dollar on the black market after the announcement, because we expect supply to improve,” Aminu Gwadabe, president of the Bureau de Change Operators of Nigeria.
A lot of speculators have taken position in anticipation of a devaluation increasing the scarcity that currently exist. The dollar sold for N369 to the dollar up from N366 on Friday. It appears however, that most Nigerians are speculating at the wrong end of the trade forgetting that the black market has already factored in demand and supply in determining the price of the dollar as such there could be little effect on the price compared to the price at the official window where it is likely to be also devalued. The Interbank market is also essentially trading at prices above N300 confirming also that the market has priced it effects of our current economic situation.