CBN has devalued the naira as market defies interventions

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CBN has devalued the naira as market defies interventions

The Central Bank has technically devalued the naira to exchange to the dollar at N380.

The apex bank took this decision after all interventions in the market, such as imposing sanctions on errant operators and use of moral suasion to curb illegal forex operations did not sustain the exchange rate of N360.

In a circular to the operators in the sector, the CBN merged the rates at both the Bureau De Change rate and Import & Export window at N380.

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Under the new dispensation, the CBN would make the dollar available to the BDCs at N378, which would be sold at N380.

The President, Association of Bureaux De Change Operators of Nigeria, ABCON, Aminu Gwadabe, said the merger of the different rates became necessary to build confidence in the sector.

He said this would make it impossible for those dealing in illegal operations and speculators to be profitable.

Gwadabe said it was an unacceptable situation for operators to access the dollar below N360 and be selling at between N370 and N375.

“There is a circular on it; we are to be buying at N378 and sell at N380,” he said.

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He said the rise in the exchange rate was not due to genuine demand because people were not really travelling or importing goods.

“The situation cannot remain like this; things will improve. If coronavirus goes, we will get over it,” he said.

It would be recalled that in the previous week, the naira exchanged between N405 and N420 to a dollar in the BDC segment of the market.

This was attributed to the crude oil price which fell drastically in the international market and this raised speculations among the BDC operators and Nigerians in general.

ABCON had said the movement was as a result of recklessness on the side of the operators, when they wanted to speculate.

It said there was no reason for that because the CBN had continued to maintain support for liquidity to the BDC subsector.

Before then, the CBN had maintained the exchange rate at about N360 for more than three years before it now devalued the naira.

However, the CBN had said it was working with the fiscal authorities to properly ease the impact of the coronavirus and ensure a sound and stable financial system.

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Author: abokimallamfx