Drama As Nigeria’s Central Bank ‘Liberalizes’ Exchange Rate
News reaching SKYTREND NEWS indicates that Nigeria’s Apex Bank has just adjusted the exchange rate of the Naira, thus making it to trade more liberally and determined by market forces.
According to TheCable report, the exchange rate section of the Central Bank’s website, the bank replaced the N305/$ rate to ‘the naira exchange rate is market-determined’.
This would mean that the exchange rate will be determined by the forces of demand and supply.
However, inside sources told TheCable that the act was carried out at the end of May and described it as a managed float as the bank intends to still carry out interventions as it deems appropriate.
This is similar to its actions in June 2016 when the exchange rate was adjusted to N305 from the official N199/$ rate.
At present, the bank makes forex available to various segments of the market to meet demand.
It also introduced an Investors and Exporters Window to provide forex for industrial purposes.
The Nigeria Customs Service had adjusted the exchange rate for its levies to N326 from N306 and began implementation on Monday.
What are the implications?
The primary effect might be an initial tumble, as was experienced in 2016.
People in need of forex for school fees, medical payments and basic travel allowance would have to pay more. The rates would, however, reach a place of stability after a period with monitoring from the apex bank.
It would also mean that the federal and state governments would have to pay more to service dollar-denominated debts.
This would, however, mean more revenue for the Nigerian National Petroleum Corporation (NNPC) and other enterprises that receive earnings in dollars.
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