Devaluation looms as Nigeria Customs Service changes exchange rate to N326

Latest development suggests the Central Bank of Nigeria (CBN) may finally allow the Nigerian naira to be floated and freely determined by market forces from the currently pegged N305 per $1.

The development also revealed that a new exchange rate regime has flagged off at the Nigerian ports. The President of Shippers Association of Lagos State, Jonathan Nicol, reportedly disclosed that the Nigeria Customs Service allegedly directed importers to pay for duties at the rate of N326 per dollar against the official rate of N306. The new price regime was cited as an order from the CBN.

Also yesterday, data obtained from the CBN site shows that the interbank rate depreciated by 0.2% to N360.43 per dollar at the close of trading, while the parallel market remained steady at N360 per dollar.

The CBN had earlier signaled that naira may be floated and be determined by the market forces of currency demand and supply. Nairametrics was first to publish the purported signal by the CBN to float the Nigeria naira.

Note that the exchange rate data which is usually published on the CBN macroeconomic indicator’s section, was earlier removed and replaced with “The Naira exchange rate is market-determined“. A market-determined exchange rate is often referred to as one that is floating or a floating exchange rate.

However, the CBN later denied the claims the bank has indeed floated naira. Meanwhile, the latest development suggests the devaluations of Naira may be officially announced soon.

The Chief Executive Officer of Nigerian Investment Promotion CouncilYewande Sadiku, was reportedly quoted as saying the apex bank was in talks with other agencies to move to a single rate for the nation’s currency.

What this means is that the CBN will no longer intervene in the foreign exchange (FX) market, as it will allow a convergence of Nigeria’s exchange rate system. This move for a market-determined exchange rate by the CBN would be greeted by investors, who have long accused the government of mismanaging the naira with its multiple exchange rates.

Source: Nairametrics

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