The Central Bank of Nigeria (CBN) has finally responded to the report of change in Nigeria’s exchange rate system, dismissing the report that naira has been “floated”.
According to information obtained on the Central Bank’s twitter handle at the early hours of Wednesday, the apex bank stated that “NO change” has been made on Nigeria’s exchange rate structure.
There has been NO change in Nigeria's exchange rate structure.
— Central Bank of Nigeria (@cenbank) June 12, 2019
Also, contrary to the central bank’s homepage on Tuesday which stated that the official rate was “market-determined”, the bank quickly reverted back to its original form on Wednesday, by providing details of the official bank exchange rate value.
What you should know: Nairametrics first reported on Tuesday that CBN may have accepted to float the exchange rate, judging from the information contained on the Bank’s website. The website has reflected this change since May, leading some analysts to opine that the CBN may have surreptitiously decided to float the naira.
As stated earlier, Nigeria operates multiple exchange rates structure, with the Central Bank’s official exchange rate currently selling for N306.95/$1. However, that is just the official bank rate which most Nigerians and businesses do not access.
Hence, 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.
Meanwhile, the CBN established the Investors’ & Exporters’ FX (I&E) window in 2017, a continued effort to deepen the foreign exchange (FX) market and accommodate all obligations.
A twist in the news on FX: The Central Bank has quashed report of floating naira, but this may be a signal the CBN is trying to test run the possibility of floating the naira. On Tuesday, a new exchange rate was introduced at the Nigerian Ports. Analysts are of the opinion this may be another FX window in view.
The new exchange rate was reportedly introduced at the Lagos Port and the Nigeria Customs Service (NCS) was said to have commenced immediate implementation. Sources disclosed that all transactions and cargoes that were cleared at the port on Monday were already paying N326 per dollar.
Reactions: Nigerians on Twitter have reacted to the purported move by the Central Bank to have floated the naira.
The retail window still remains to be converged. When we see the retail window which still goes for N335 – N345 and the official one of N307, moving towards the wholesale and NAFEX rates, then we can begin to think of a more liberalised FX market.
— Yinka Ogunnubi (@yinkanubi) June 12, 2019
We can’t be certain about what they will and won’t do anymore. Plus, throwing in billions of dollars every now and then to keep the Naira stable might no longer be a feasible action.
— “It’s Above Me” (@4eyedbee) June 11, 2019
Your statement looks very ambiguous and vague. You say one thing, the market say another. There's wide variance between the official and parallel exchange rate market. And here you're saying the exchange rate structure remain constant. This is practically untrue.
— Dr Nath (@Nathani48195412) June 12, 2019
Lies even customs have change the exchange rate no longer 305 but 326
— omoba Adekunle (@asideywalk) June 12, 2019