By a stroke of the pen Friday, the central bank of Nigeria added more than seventy billion naira to the amount to be made available to the three tiers of government via the monthly federal accounts allocation.
The largesse is courtesy of the movement in the official rate of the naira from N360 to N380 for one US dollar which is near the rate of the national currency on the more market determined Investors & Exporters window established by the central bank in 2017.
The central bank did not issue any official announcement about its adjustment of the official rate commonly called the official Secondary Market Intervention Sales SMIS but officials of the apex bank confirmed to reporters that the rate had been adjusted.
In confirming the development last night, one senior official of the Central Bank said, “yes, it is aimed at moving the rate closer to that of the Investors and Exporters (I&E) window, which traded at N386/$1 yesterday.
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“From time to time, the adjustment would continue to happen, either upward or downward in line with market fundamentals. Certainly, no single rate can be achieved, but we would keep moving towards I&E rate.”
There has been a strong clamour for adopting a more market friend approach to managing Nigeria’s FX market and the latest development comes a 10 days after the CBN Governor, Mr. Godwin Emefiele, told some foreign investors that the desire of the central bank “is to achieve exchange rate unification” around the Nigerian Autonomous Foreign Exchange Market (NAFEX)/ I&E rate.
Emefiele had explained: “what we mean by exchange rate unification is moving towards the NAFEX. NAFEX is our dominant market for the purchase and sale of forex and it is a free market where everybody is free to sell their dollars and those who want to buy are free to buy dollars.
“That means that whether you are a business man, a bank, CBN, and you have dollars, you can bring it to the market to sell and if you want to buy dollars, you can come to the market.
“Like some of you must have seen, three years before 2019, we saw a relatively stable forex market because the NAFEX rate and even the rate at which the central bank transacts business outside the NAFEX were substantially close to each other. So, the CBN will continue to pursue unification around the NAFEX.”
In a nine-page document released Friday, the Lagos based economist Bismarck Rewane who put the purchasing power parity of the National currency at N400.87 to the dollar, said he did not believe adjusting the official rate as the apex bank has done will lead to the crash of the Naira.
The world bank has long encouraged Nigeria to manage its currency rate better to remove the irritation to investors who complained against the multiple rates and the administrative adjustment of the currency by the apex bank.
