Though the Central Bank of Nigeria (CBN) has continued to deny the fact that it had technically devalued the Nigerian naira, financial pundits refused to be confused after all.
Whereas many resisted being convinced by choice of words used by the apex bank in approving end-user access to dollar at N380, the CBN had said it had not devalued the naira, claiming that market fundamentals did not support naira devaluation at this time.
The apex lender argued that it was working with the fiscal authorities to properly and accurately dimension the immediate and expected impacts of the coronavirus in order to respond comprehensively and at the same time, ensure a sound and stable financial system.
While struggling to explain and insist that what the CBN had done was not devaluation but mere adjustment, he said “What you seen is an adjustment in currency by allowing the I and E window to determine status of the naira.”
Speaking in Lagos weekend at a meeting with Bankers’ Committee and key forex stakeholders, CBN Governor, Godwin Emefiele averred further that prices are determined by what is available depending what we are able to put on the table and what other dealers were able to put on the table, thus allowing market forces to determine exchange rate in the process.
All said, the naira exchanged to the dollar for between N390 and N401 at the Bureau De Change segment of the market weekend having recently suffered serious shocks from oil price drop and COVID-19 impacts.
Business Hilights recalls that for more than three years, the exchange rate had been stable at about N360 to a dollar, due to endless momentary interventions by the CBN, but latest realities have forced the apex bank to let loose in merging exchange rates at N380 to one dollar.
Observers say CBN 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.
Accordingly, under the new dispensation, the CBN would make the dollar available to the BDCs at N378, which would be sold at N380.
Reacting weekend, the President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, averred that the merger of the different rates became necessary to build confidence in the sector.
While noting that the merger would make it impossible for those dealing in illegal operations and speculators to be profitable, Gwadabe argued that it was an unacceptable situation for operators to access the dollar below N360 and be selling at between N370 and N375.
