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Naira Devalued By 22% As CBN’s New Forex Regime Takes Effect

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As the Central Bank of Nigeria’s decision to “free” the naira and allow market forces drive the position of the Nigerian currency, the interbank market has pushed the local currency to 264 against the US dollar.

According to Bloomberg, the interbank market rate opened around N253 to the dollar on Monday, June 20, 2016 at the start of the new foreign exchange regime.

At about 11:02am on the first trading day, the naira had moved to 264 to the dollar at the inter-bank market, with dealers expressing extreme caution in proceeding with transactions.

A few minutes later, the naira was up to 260, which was the initial predicted position the CBN-FMDQ OTC guideline was planned to work with.

Naira Devalued: Central Bank Governor of Nigeria, Mr. Godwin Emefiele
Naira Devalued: Central Bank Governor of Nigeria, Mr. Godwin Emefiele

Earlier, the Central Bank said primary dealers of forex (banks), will be expected to make deals at N260 to the the dollar with a band from 260 to 270, while the CBN expresses optimism that the currency will settle at 250 to the dollar.

Nigeria’s President Muhammadu Buhari, last week, finally caved to pressure from international financial organisation and approved the application of free markets in the country’s forex market.

For one year, Buhari insisting against better advice to liberalize the naira and permit market forces to determine its value. Last Monday, he hinted to this decision with a cliche-filled editorial in the US news magazine, Wall Street Journal in which he called for free markets.

Mr. Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), on Wednesday, June 15 unfolded a new forex exchange market regime which took off Monday, June 20, 2016.

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