Naira falls sharply on official market after pressure to unify Forex rate

Nigeria’s naira fell 5.5% on the official market on Tuesday, after the central bank sold dollars to lenders at a lower rate, bowing to pressure from international lenders to unify its multiple exchange rates.

Nigeria has been under pressure from lenders such as the World Bank and International Monetary Fund to merge its exchange rates. The World Bank is expected to approve a $3 billion budget support loan for Nigeria in the coming months.

Finance Minister Zainab Ahmed has also pushed for uniform rates to generate more naira from Nigeria’s crude receipts.

The latest moves in the currency are the second adjustment in six months. In March, the bank devalued the official rate by 15%.

On Tuesday, the naira eased to 380.50 in off-market trades, from 360.50 close on Monday, traders said.

A central bank spokesman did not respond to a request for comment.

No quotes for the naira were available on the official market during regular trading for the second straight session, Refinitiv Eikon data showed, after the central bank last week depreciated the currency at an auction.

The central bank, Nigeria’s main forex supplier, asked lenders on Friday to bid for dollars at 380 naira per dollar, 5.3% above its official rate.

The naira traded at 387.70 on the over-the-counter spot market, widely used by investors and importers, while it was quoted weaker at 460 on the black market.

Nigeria has offered multiple foreign-exchange rates, which it imposed to manage dollar demand after oil prices crashed. But dollar shortages have followed, stifling growth.

The currency has come under pressure in recent months after the coronavirus pandemic and a fall in the price of oil, which caused the gap between the spot and black markets to widen.

Central Bank Governor Godwin Emefiele has said he would not unify rates close to the black market level.

About the author

Joseph Chukwuma Oputa

Joseph Chukwuma Oputa is the Managing Editor of Maslow Businessnews and Physicians News publications published by Maslow Business News Publications, Lagos, Nigeria.

Joseph Oputa is a proud Alumnus of the prestigious Nigerian Institute of Journalism, Lagos and Federal Polytechnic, Bida, Niger State.

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