Naira exchange rates to converge—CBN

Central Bank of Nigeria (CBN) has maintained that there would be a convergence of the current multiple exchange rates despite the depreciation seen in the black market. The CBN Director of Monetary Policy, Hassan Mahmud, said this during a virtual investor conference on Tuesday. He said “The spot rate is the reference rate and I expect the convergence of Nigeria’s several exchange rates, a gap which has frustrated investors.” Mahmud said the apex bank was worried about the supply side of foreign exchange and the confidence in the system while adding that the level of the Naira is expected to adjust based on demand.

According to him, market failures had made the CBN adopt a managed float regime. This statement is coming after the Naira hit a low of N532/$1 on the unofficial or parallel market on Monday, with dollars hard to come by following the CBN’s recent actions to channel demand from the unofficial market, where the Naira is trading at much lower levels. The trend of the  Naira has been bearish and with the increase in demand for imported products, most analysts believe that rates would depreciate even further.

Central Bank of Nigeria is taking an aggressive stance to discontinue the supply of foreign exchange to Bureau De Change operators (BDCs) in order to clamp down on what the CBN Governor, Godwin Emefiele, termed illegal activities being perpetrated by BDCs when foreign exchange is supplied to them. All commercial banks have been asked by the Central Bank of Nigeria (CBN) to publish on their websites, the names, and Bank Verification Numbers (BVN) of customers who participate in fraudulent and unscrupulous tactics to obtain foreign exchange from banks.