The naira stayed stable at N461/$1 on the parallel market yesterday, as traders appeared confused about whether the Central Bank of Nigeria’s (CBN) adjustment of the exchange rate at the official window by 5.54 per cent to N381 per dollar from N361/$ on Tuesday, meant that the apex bank had officially devalued the local currency or not.
At the time of this report the CBN’s website still showed the old rate of N360 per dollar, but analysts said the N381 per dollar new official rate published on Tuesday on the website of the FMDQ OTC Securities Exchange, a platform that oversees foreign-exchange trading, indicates that the regulator had weakened the naira, in order to achieve its stated objective of unifying the country’s multiple exchange rates. The adjustment of the official rate to N381 per dollar from N361/$ on Tuesday is on the heels of the CBN’s adjustment of the naira’s rate from N360/$1 to N380/$1 at the Secondary Market Intervention Sales (SMIS) last Friday.
The SMIS is the market where importers bid for forex using Letters of Credit and Form M. It was established by CBN for importers to ease the pressure faced by businesses in the foreign exchange market through sales of foreign currency to authorized dealers (wholesale) or to end users through Authorized dealers. Traders said the CBN sold $100,000 at N380.50 per dollar on Wednesday on the official market. The CBN has been under pressure both from the World Bank and International Monetary Fund (IMF) to unify the country’s multiple exchange rates as part of measures to improve the transparency of its currency-management system. Investors have said the absence of a single rate creates confusion and deters foreign investment.