Official Naira Rate Drops to N307/$

Obinna Chima with agency report

The Central Bank of Nigeria (CBN) on Monday sold the dollars at N307 to the dollar for the first time on the official interbank market, according to the FMDQ OTC.

Traders said the development could signal a gradual move to merge its multiple exchange rates.
Nigeria’s convoluted exchange rate system has been used to manage what the central bank described as “frivolous” demand for dollars at the peak of a currency crisis which began two years ago.

The West African country now has at least five exchange rates including the official one which the Bank used to mask pressure on the currency. In April, it allowed foreign investors to trade the naira at market determined rate, which has weakened the currency to around N360 to the dollar.

“It’s possible the central bank is working towards a gradual convergence of rates, one trader told Reuters.
Earlier this month, the Bank sold dollars at N306 to the dollar for the second time after maintaining a level of around N305 to the dollar on the spot market for two months.

The CBN has injected a total of $14.184 billion into the interbank segment of the foreign exchange (FX) market since it started its forays in the market in February this year, figures compiled by THISDAY had shown.

According to weekly FX sales by the central bank between February 21 and November 30, compiled by THISDAY, the CBN sold the greenback to authorised dealers in 60 sessions.

Dollar shortages gripped Africa’s biggest economy as crude sales, Nigeria’s mainstay, plunged at the start of an oil price rout in 2014. That triggered a recession last year and frustrated businesses, which had to find dollars on the black market as a result.