The Central Bank of Nigeria (CBN) is allegedly planning to collapse the multiple exchange rate policy of the CBN moving to a single exchange rate policy. This is according to sources from the bank.
Some inside sources who want to remain anonymous disclosed that the country will merge the official rate, the rate for bureau de change (BDC) operators, the rate for importers and exporters, and some others.
A senior central bank official who does not want to be identified, said, ‘Today we allowed the rate at the importer and exporters (I&E) window to adjust in response to market developments’
The CBN official admitted that in today’s transaction, that it had adjusted the rate at the I&E window for foreign investors from N366 per dollar to N380 per dollar.
Some economic and financial experts including global financial institutions like the International Monetary Fund (IMF) have been very critical of the multiple exchange rate system which has been operational in Nigeria. The country has been operating this system which pegged the official rate at about N305 per dollar, in a bid to control demand for dollars.
Government businesses and some selected priority companies like importers of petrol usually benefit from the supply of cheap foreign exchange. However, the CBN created an importer and exporter window in 2017 as a reaction to the economic recession in 2016, providing a market where forex can be traded at market-determined prices.
The single exchange rate has been identified as a very effective tool for resource allocation. Analysts are of the opinion that the multiple exchange rate can be subject to abuse and manipulation, possibly aiding corruption.