Nigeria’s exchange official exchange rate closed on Friday at N290 according to the website of the Central Bank of Nigeria. FMDQ website quoted N2912.25 as their closing rate.
This represents the lowest the Nigeria has fallen to in the official interbank market since the Flexible Exchange Rate Policy was introduced on the 20th of June 2016.
According to our findings, the exchange rate dropped after the Central Bank finally removed the price “ceiling” which it had imposed on companies who wanted to sell forex in the interbank market. Market participants inform Nairametrics that other suppliers of forex in the market such as the Oil companies were “mandated” by the CBN not to sell dollars at a price above their “imaginary” cap said to be about N285.
This probably explained why the dollars has remained mostly flat since the new policy was introduced about a month ago. By imposing this cap, analysts believe it negates the free market principle that the floating of the Naira was supposed to bring leading to a further price disparity between the official and interbank market.
With the black market crossing N350 to the dollar, thus widening the gap to the interbank rate, the CBN is now inadvertently under pressure as the credibility of its interbank market is now being questioned by foreign investors whom they sought to buy Nigeria’s foreign bonds.
The removal of the ceiling is now thought to be the reason why the dollar closed at N290 suggesting that more depreciation could occur in the coming week.