The Central Bank of Nigeria, CBN, has yesterday announced plans to salvage the Naira from dropping by cancelling the official window where it sells dollar to end users through banks twice a week.
According to Vanguard publication, the Naira will now be sold at the ruling inter-bank market rate indicating an implicit devaluation of the currency.
It was also learnt yesterday that Naira was sold for N197 to the dollar at the inter-bank market.
A group called Financial Market Dealers Quote, FMDQ, which comprises of Nigeria’s main commercial banks and the central bank, said commercial banks have also been banned from re-selling CBN dollars to other banks, another attempt to end speculation in the naira.
In a statement signed by its Director of Communication, Mr Ibrahim Mu’azu, yesterday, the CBN bank said: “The managed float exchange rate regime, which the bank had adopted following the liberalisation of the foreign exchange market, has for the most part been successful in ensuring exchange rate stability in line with its mandate.
“In recent times, however, with the sharp decline in global oil prices and the resultant fall in the country’s foreign exchange earnings, the bank has observed a widening margin between the rates in the inter-bank and the RDAS window, thus engendering undesirable practices including round-tripping, speculative demand, rent-seeking, spurious demand, and inefficient use of scarce foreign exchange resources by economic agents.
“This has continued to put pressure on the nation’s foreign exchange reserves with no visible economic benefits to the productive sector of the economy and the general public.
“In view of the foregoing, it has become imperative that appropriate actions be taken to avert the emergence of a multiple exchange rate regime and preserve the country’s foreign exchange reserves.”