The Central Bank of Nigeria (CBN) has declared that Nigeria currency (Naira) exchange rate is now floated, which implies that the Naira exchange rate will now be fully determined by market forces of demand and supply.
Exchange rate float: According to the information obtained on the CBN website, the exchange rate data on the CBN macroeconomic indicator’s section has been removed and replaced with “The Naira exchange rate is market-determined“. A market-determined exchange rate is often referred to as one that is floating or a floating exchange rate.
The website has reflected this change since May, leading some analysts to opine that the CBN may have surreptitiously decided to float the naira.
But a further click into the link shows the exchange rate remained between N305 and N307, which is the Central Bank’s official rates. This has also been the same rate it has sold dollars for over two years since the last depreciation. So why then is the CBN informing the market that “the Naira exchange rate is market-determined”?
Was it an error or is it sending a subtle signal to the market that it has finally agreed to adopt a market-driven exchange rate?
More details: There are multiple exchange rates in Nigeria. The Central Bank’s official rate is (was) N305/$1 which is also published on its website and has been that way for years before the latest change depicted above.
Meanwhile, the parallel market (bureau de change) is the most patronized for individuals, travellers and even businesses. In the parallel market, price is specifically determined by market forces of demand and supply.
Note that in 2017, CBN officially introduced a multiple exchange rates system, which added the establishment of the Investors’ & Exporters’ FX (I&E) window to the existing official bank rate. According to CBN, the move was a continued effort to deepen the foreign exchange (FX) market and accommodate all obligations.
“The purpose of establishing the I&E FX market is to boost liquidity in the FX market and ensure timely execution settlement for eligible transactions.”
In the I&E window, the supply of foreign currency to the window is done through portfolio investors, exporters, Authorised Dealers and other parties with foreign currency to exchange naira. Also, CBN is a participant to promote liquidity and ensure professional market conduct. The I&E window is market determined and is viewed as a major reason for the stable exchange rate currently seen in Nigeria.
The Bottom Line: While the CBN is yet to issue an official statement to the change in the Nigeria exchange rates system, what this suggests is that the CBN has finally accepted that the exchange rate will henceforth be determined by the forces of currency demand and supply. Perhaps, the CBN is bracing itself for a possible exchange rate convergence in the no distant future.
Nevertheless, CBN has continuously intervened by injecting billions of dollars to defend the naira due to excess demand for the dollar. Whether this means CBN will stop intervening in the FX market remains yet unknown.
Note: This article was updated on June 12 to reflect new information
South-West Governors say attacks in Lagos were attempts to weaken the region’s economy
South West governors have they described the coordinated attacks in the state as an attempt to weaken the region’s economy.
Governors of the South-West states have pledged their supports to their Lagos State counterpart, as they described the coordinated attacks in the state as an attempt to weaken the region’s economy.
This was disclosed by the Chief Press Secretary of the state, Gboyega Akosile, during the visits of the Governors and the Federal Executive Council members from SouthWest to the public assets and private properties destroyed in last Wednesday’s arson in the state.
He tweeted, “Shock! This was the expression on the faces of the Federal Executive Council (FEC) members from Southwest and Governors as they toured the public assets and private properties destroyed in Wednesday’s coordinated arson in Lagos State.
“The delegation of Governors and Ministers was personally received by Sanwo-Olu at the State House in Marina, where the Lagos helmsman showed them the pictorial evidence of the violence before visiting some of the torched assets.”
At a joint press conference held after the tour, Chairman of Southwest Governors’ Forum and Ondo State Governor, Arakunrin Rotimi Akeredolu, SAN, compared the scenes to a war zone, given the extent of the destruction.
According to him, the violence that resulted from the EndSARS protest left much to be desired, stressing that there was an agenda beyond the youth demonstration against police brutality.
He said, “We are deeply concerned with the ease with which public buildings, utilities, police stations, and investment of our people have been burnt despite the proximity of security agencies in those areas.
Shock! This was the expression on the faces of the Federal Executive Council (FEC) members from Southwest and Governors as they toured the public assets and private properties destroyed in Wednesday's coordinated arson in Lagos State. pic.twitter.com/TahuPIWkcQ
— Gboyega Akosile (@gboyegaakosile) October 25, 2020
What this means: From all indications, it is obvious that the South-West Governors believed that the said attack, which were rumoured to have been carried out by suspected hoodlums, were sponsored by some people to deliberately disorganize the region’s economy.
#EndSARS Protest: 80 BRT buses worth N3.9 billion were destroyed by hoodlums – LASG
The Lagos State Government disclosed that the 84 BRT vehicles destroyed by the hoodlums cost a total of about N3.9 billion.
The Lagos State Government has revealed that 27 of the burnt Bus Rapid Transit (BRT) vehicles in the Oyingbo and Ojodu Berger areas of the state cost $200,000 each, while 57 of them cost $100,000 each, all totaling about N3.9 billion.
This statement was made by the Lagos State Government on Friday, after evaluating the extent of damage made to the Bus Rapid Transit (BRT) vehicles.
What you should know
Few days ago, hoodlums hiding under the cover of #EndSARS protests allegedly attacked and razed the Oyingbo BRT terminal, with several buses burnt. Nairametrics reported that Primero Transport Services Ltd (PRT), the owners of BRT buses said they have lost over N100 million in 6 days due to the #EndSARS protests.
The State’s Commissioner for Information, Mr. Gbenga Omotosho, in an exclusive interview with Punch, disclosed that:
- 23 big BRT buses were razed down, while 57 medium-size BRT buses were affected by the violence, which brings the total of the BRT vehicles destroyed to 80.
- 23 of the 80 BRT buses burnt by the hoodlums were at Ojodu, while the remaining 57 were at the Oyingbo area.
- The big buses cost around $200,000 each, while the medium-size ones cost around $100,000 each.
What they are saying
Mr. Omotosho said, “As I speak, the Governor and some of us are going around the state from one facility to the other. We are also visiting private facilities. Some of the places were the Oregun Vehicle Inspection Service office, the BRT park at Oyingbo, and the terminus at Ojodu Berger.
“I don’t know how they planned it; the hoodlums left the old buses and went for the new ones. The new ones were worth billions of naira.
“However, the cumulative losses incurred by the state are not ready yet. But it will be mind-boggling. It came on a scale beyond belief. We know that the police have apprehended suspects.”
What this means
The vehicles were purchased in dollars; So, the consistent decrease in the value of Naira is expected to edge the cost of these buses up, when denominated in Naira.
The Lagos State Commissioner for Information, Mr Gbenga Omotosho explained that with the current foreign exchange rate, the 80 destroyed BRT buses are now valued at N3.929 billion.
BREAKING: Lagos State reviews curfew again, now from 8pm to 6am
Governor Babjide Sanwo-Olu has once again reviewed the curfew in the state to now commence between 8 pm to 6 am.
The Lagos State Governor, Babajide Sanwo-Olu, has further reviewed the curfew earlier imposed on the state to help contain the large scale violence following the hijacked #EndSARS protests against police brutality and extra-judicial killings. The curfew now starts at 8 pm and ends at 6 am daily.
This is coming 2 days after the Governor had eased the 24-hour curfew to start from 6 pm to 8 am daily.
This disclosure was made by the Lagos State Commissioner for Information and Strategy, Gbenga Omotoso, on Sunday, October 25, 2020.
The Commissioner in his statement said, “The curfew in Lagos State has been reviewed. Restriction time is now 8 pm to 6 am. Lagosians are enjoined to plan their journey times as they go about their lawful businesses. Public schools remain shut till further notice.”
What this means
This new review gives Lagosians an extra 4 hours to go about their daily activities.
What to expect
The Lagos State government will keep on reviewing and relaxing the curfew, as long as the security situation does not spike again.