Foreign exchange traders have become savvy in making dollars purchase decisions as likelihood of second devaluation of the naira this year increases.
Today’s trading ended without quotes on Nigeria’s official forex market after currency weakened by five per cent at last auction.
Findings showed there were no quotes for the naira on the official market on Monday after the Central Bank of Nigeria (CBN) allowed the naira to weaken by five per cent at a retail auction. This was in line with the apex bak’s move to unify the currency’s multiple exchange rates.
Currency traders refused to quote prices for the naira amid confusion about the impact of the central bank’s adjustment. The CBN, Nigeria’s main forex supplier, asked commercial banks on Friday to bid for dollars at N380 per dollar, five per cent above its official rate of N360.
The apex bank had in May 2020, devalued the naira to N380 to a dollar. The devaluation came after over three years of push from financial market managers, the World Bank and International Monetary Fund for the local currency to be devalued.
The Federal Government’s commitment to the IMF on devaluation of the naira was part of the considerations made by the global lenders before granting Nigeria’s N3.4 billion loan earlier in the year.
The multilateral institutions had insisted that with drop in foreign exchange reserves and decline in Nigeria’s dollar earnings over fall in crude oil prices, Nigeria had no option but to devalue its currency.
The CBN also adopted a unified exchange rate, and pushed the official rate of the naira to N376 to dollar for International Money Transfer Operators rate to banks; N377 to dollar for banks’ dollar sale to CBN and pegged CBN’s dollar sales to banks at N378.
