Nigeria’s central bank officially commented on the widely perceived devaluation of the naira from N307/$1 to N360/$1 at the official window. The CBN on its twitter handle said the currency was not a devaluation but an “adjustment of price.
“Governor, Godwin Emefiele clarifies supposed devaluation of Naira. Says it is an adjustment of price and not a devaluation of the currency.”
— Central Bank of Nigeria (@cenbank) March 21, 2020
Nairametrics reported earlier today that the Central Bank of Nigeria had devalued its official exchange rate from N307/$1 to N360/$1. The apex bank has now reflected this change on its website signaling a confirmation. The bank is yet to issue a press release to this effect.
The CBN has now officially devalued by 15% moving from N307/$1 to N360/$1. Depreciation at the “market-determined” I&E window is 5% having moved from N360/$1 to N380/$1. Nairametrics also got hold of a letter from the CBN to banks informing them of the new exchange rate for dollars flowing from the International Money Transfer Operators (IMTOs). According to the CBN, IMTOs will sell to banks at N376/$1 while banks will sell to the CBN at N377/$1. The CBN will sell to BDC’s at N378/$1 while the BDC’s will sell to end-users at “no more than” N380/$1.
Reactions: Initial reactions to the CBN’s tweet drew some condemnation from some twitter users.
Call it whatever name. It needs to happen and it has happened.
— Victor Adegite (@VAdegite) March 21, 2020
Devaluation is an official lowering of the value of a country's currency within a fixed exchange-rate system, in which a monetary authority formally sets a lower exchange rate of the national currency in relation to a foreign reference currency or currency basket.
CBN did this
— Kehinde Oyelade (@KehindeOyelade2) March 21, 2020
This is totally unnecessary @cenbank . Why play with words/semantics?
The reality remains the same
— The Revolutionary Seeker (WAEC) (@The_Seeker76) March 21, 2020
Most analysts believe the central bank under Godwin Emefiele hates to use the term devaluation whenever there is an adjustment in the currency. In June 2016, Godwin Emefiele announced Nigeria was moving to a “flexible exchange rate” policy a move that increased speculation and worsened the currency situation. Similarly, in 2017 the CBN introduced the Investor and Exporter window allowing the exchange rate to trade at between N360/$1 and N366/$1 while it retained N305/$1 as its official rate. It also created other exchange rate windows.