By Olisemeka Obeche
The Central Bank of Nigeria (CBN) has denied speculation that last Friday’s decision to peg the exchange rate of the Naira at N380 to the dollar was devaluation of the Nigerian currency.
The CBN governor, Godwin Emefiele, who made the clarification on Saturday, explained that the new exchange rate at the Investors and Exporters (I&E) foreign exchange window was only an adjustment of the rate.
Emefiele told participants at an extraordinary bankers committee meeting comprising banks’ chief executive officers and CBN directors in Lagos that the adjustment was made because the apex has a responsibility to see to the adjustment in the national currency.
“What you have seen is an adjustment in the country’s currency and not devaluation,” he insists.
Recall that last Friday, the CBN through an official circular by the Director, Trade and Exchange Department of the CBN, Ozoemena Nnaji, announced the new exchange rate. The circular was on the disbursement of the proceeds of the International Money Transfer Operator (IMTO).
The official said the new rate effectively established a convergence that collapsed the multiple exchange rate policy used in determining the value of the Naira since June 2016.
Under the new rate, the country will now have a single exchange rate for official transactions, bureau de change (BDC) operators as well as for importers and exporters of goods and services, amongst others.
The circular said henceforth dollars would be sold to banks at the exchange rate of N376 per dollar, while banks would sell to the CBN at N377 per dollar.
Also, the rate CBN would sell to BDC operators would be about N378 per dollar, while BDCs to end-users would not sell more than N380 per dollar. The maximum volume of sales for each market is put at $20,000 per BDC.
The new rates coming after weeks of agitation by some concerned economists and financial experts for the devaluation of the national currency was seen by many as CBN finally giving in to the pressures.
The apex bank had recently hinted that devaluation of the Naira was not one of the options it was considering, even in the face of the deteriorating economic conditions, amid the ravaging impact of the coronavirus pandemic on the global economy.
Last week, the CBN denied any plan to devalue the Naira, as “the current economic circumstances and macroeconomic fundamentals do not support Naira devaluation at this time.”
To buttress its decision, the apex bank argued that the Naira has been under pressure after crude oil prices fell below $30 per barrel at the international oil market as a result of the impact of the coronavirus pandemic on the global economy.
On Saturday, the CBN governor denied the apex bank had any hand in the alleged devaluation of the Naira. “We have also been accused of having a hand (in Naira devaluation). We don’t have a hand,” Mr Emefiele said.