The Central Bank of Nigeria (CBN) has once again devalued the naira, this time, from N411 to N413.49/$1, adding to the many times the Nigerian currency has been devalued in 2021.
The devaluation followed CBN’s adjustment to the official exchange rate on its website, changing it from N411/$1 to N413.49/$1.
The CBN confirmed the devaluation through the response of its spokesperson, Osita Nwasinobi, who told The Cable upon inquiry: “If you see N413, then that’s what it is. The market determines the rate.” The devaluation pushed the naira to its all-time high in parallel market on Friday.
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Under the leadership of governor Godwin Emefiele, the central bank has been working to tame the tides of multiple exchange rates, which has been fingered as an obstacle to Nigeria’s economic growth. In May last year, the CBN adopted the Importer & Exporter window (I&E), in an attempt to heed the repeated calls by the International Monetary Fund (IMF) and experts for Nigeria to have a unified foreign exchange rate. The naira was adjusted from N379 to N411.
The CBN has tried many regulatory policies in an attempt to stabilize the naira, which has been free-falling for years now. Recently, the apex bank cut off dollar supply to Bureau de Change operators, accusing them of inflating dollar price in the parallel market. Also, AbokiFX, an online forex aggregator, was in September, declared a ‘person’ of interest in Nigeria’s forex crisis. Emefiele accused the online outlet of being responsible for the free-fall of the naira by manipulating market prices, and vowed to go after it.
AbokiFX was forced to shut down as the pressure from the central bank heightened. The outlet said then it hopes its decision to suspend operation will boost the naira’s value in the foreign exchange market.
“We will not be publishing any form of rates on our platforms for now. We sincerely hope this suspension will lead to the Naira appreciation,” it said.
Months after AbokiFX closed its foreign exchange rates publishing, the naira is yet to show any indication that the aggregator was manipulating the forex market. The naira’s value has continued to plummet, compounding the challenges of doing business in Nigeria.
Though in its latest move to quell the forex crisis, the CBN shifted its dollar supply to commercial banks, mandating them to sell to qualified applicants at the I&E rate.
However, business owners who rely heavily on FX to run their businesses, are still lamenting that insufficient dollar supply in the Nigerian market is resulting in high cost of goods and services, nearly crippling their businesses. On Friday, December 31, 2021, the naira closed at N435/$1 after opening at N420/$1 at the official market, according to FMDQ OTC Securities Exchange, a forex data platform.
Experts said that the continuous crash of the naira is as a result of insufficient dollar liquidity in Nigeria. Increase in demand for dollars is said to be forcing the CBN to deplete Nigeria’s dollar reserve, fueling the fall of the naira. With depleted oil output and reduced diaspora remittances, the naira is expected to undergo more devaluation in 2022.