Central Bank of Nigeria on Friday allowed the naira to weaken to a record low of N419.75 against the dollar on the official market.
According to traders, the development could be a move to unify multiple exchange rates, naira having traded within a band of N380 and N381 to the dollar since July last year.
Naira after trading N419.75 against the dollar at the weekend, then closed at 411.25, the last closing rate for the naira over-the-counter spot market .
The CBN also removed its official exchange rate of N379/$1 from it’s website, further bolstering speculations that the CBN wants to make NAFEX rate the default reference exchange rate for official and legitimate transactions.
The move further weakened the naira on the black market by 0.2 per cent as buying and selling hit the N480-N484 range.
“What the Central Bank is saying is that the (OTC) spot rate will be the official rate because that’s where the largest volumes trade,” said a currency trader.
Nigeria operates multiple currency regimes, which frustrate businesses and have prompted calls from the World Bank for the rates to be unified to attract investment.
Rising dollar demand has put pressure on the Naira as providers of foreign exchange, such as offshore investors, exited after the COVID-19 pandemic triggered a fall in global oil prices.
Central Bank Governor, Godwin Emefiele, in February said that the currency was trading at N410 naira on the official market while the government has been using that rate for its business as it tries to boost earnings from crude sales, its main export.
The central bank had been trying to unify the rates and boost the dollar supply through direct interventions.
It revised the futures rate on the naira upwards last month to ease pressure on the currency after quoting the 150-day futures contract at 435.81 naira, in its first dollar sales to foreign investors this year.
