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Central Bank of Nigeria adjusts foreign exchange market, unifies rates

It is going to assuage the fears of portfolio investors, reduce rent-seeking in the foreign exchange market, serve a deterrent to currency hoarding and mitigate revenue shortfalls for the economy. (Image source: James Malone/Flickr)

The Central Bank of Nigeria (CBN) has tinkered with the country’s exchange rate, and in the process, unified the previous various exchange rates

From March 27 ,2020 in a statement from the CBN, International Money Transfer Service Operators (IMTSOs) will sell  to the banks at 376 Naira  to US Dollar , banks will in turn sell to CBN  at 377 Naira to a US dollar the, CBN  will sell to  Bureau De Change (BDCS), at  378 Naira  which  will sell to  their  customers at  380. The  daily volume for any  BDCS had been pegged at US$20.000.

For any customer requesting for foreign exchange through any of the official sources, it will be US$380 as this will be the rate at Investors and Exporters window- rates at which the Bureau De Change will sell to its customers. The same rate is applicable for the small and medium scale enterprises (SMEs) as well as customers requesting for invisibles such as tuition fees, personal travel allowance and business travel allowance. The GBP rate would be derived from the US$ across rate on the date of sale of the dollar.

Before now, the country had about five different exchange rates. These include one for offshore investors at Investors and the Exporters window; other for the official window; another one for the interbank. The bureau de change operators’ rate was also different from the rest.

Dr Musa Yusuf, director general of the Lagos Chamber of Commerce and Industry (LCCI), the foremost organised private sector body, said that the current macroeconomics realities as well as developments in the global economy have made exchange rate adjustment inevitable. "Current macroeconomic fundamentals cannot support the current exchange rate regime. This underscores the inevitability of an exchange rate adjustment. We actually do not have a choice in the circumstances."

Musa Aminu Gwadabe, president, Association of Bureaux De Change Operators of Nigeria (ABCON), welcome the adjustment. "It is going to assuage the fears of portfolio investors, reduce rent-seeking in the foreign exchange market, serve a deterrent to currency hoarding and mitigate revenue shortfalls for the economy.”

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