CBN ‘technically’ devalues the Naira?

Isola Moses | ConsumerConnect

In what certain stakeholders in the Nigerian banking and other financial institutions have described as “technical devaluation” of the national currency Naira, the Central Bank of Nigeria (CBN) has sold the United States (U.S.) Dollar to local Jaiz Bank at N360 on the official currency market, weaker than the 306 where it was previously pegged, implying a 15% devaluation, traders said Friday, March 20.

Traders said no quotes were shown Friday for the Naira on the official market, which reportedly, has been supported by the Central Bank for more than two years, Reuters report says.

The move was said to have been made following the impact of an oil price plunge spread across asset classes in the country Nigeria, causing investors to widen spreads on the bond market, sell stocks and weaken the country’s dollar reserves.

Reuters reports that JP Morgan recently stated that it expected Nigeria to devalue its currency by around 10% to 400 Naira per Dollar by the end of June after a sharp oil price tumble ramped up the pressure on Africa’s biggest economy.

ConsumerConnect has also reported that other international analysts, especially at Bloomberg, had projected that the CBN might devalue the Naira in no distant future.

On the over-the-counter spot market for investors few trades were done Friday on the Naira at 380 on thin liquidity, traders said.

Nigeria operates a multiple exchange rate regime which it has used to manage pressure on the currency over time.