Naira loses as Nigerian govt adopts flexible exchange rate policy

Naira on Monday fell against the U.S. dollar at the Investors and Exporters window as well as the parallel market, as the federal government said it has adopted the rate for the I&E window for its official transactions.

It was the second big fall recorded this month at the black market, according to data posted on abokiFX.com, a website that collates parallel market rates in Lagos.

According to the data posted, the currency closed at N486.00 on Monday, a N1.0 or 0.21 per cent devaluation from N485, the rate it stood since March 12.

The margin is significant as naira had been at or below 480 for months, after touching an all-time low at the unofficial market on November 20 last year, when it traded at the black market for N500.

This occurred as Nigeria adopted a new flexible exchange-rate policy for official transactions, a move that effectively marks the third devaluation of the local unit within year, Bloomberg reported.

“The government will start to use the flexible rate, that has until now applied to investors and exporters, for government transactions too,” the report quoted Zainab Ahmed, Finance Minister, to have said while briefing journalists in the state house on Monday in Abuja.

Mrs Ahmed said “Within the government and the central bank, there is only one official rate and that’s the Nafex rate,”

Since the beginning of the year, the Nafex rate has been pegged at an average of N410 to the greenback currency, as against the Central Bank of Nigeria’s initial rate of N379.

On Monday, the currency fell slightly against the U.S. dollar at the I&E window, data posted on the FMDQ Security Exchange where forex is officially traded showed.

The currency closed at N410.13 at the trading session of the I&E window, Monday. This represents N0.13 or 0.03 per cent depreciation from N410.00 the rate at which it closed at the previous session on Friday.

The fall occured as the naira saw an intraday high of N401.00 and a low of N412.00, before closing at N410.13 on Monday.

The slight devaluation seen by the domestic currency became pronounced as turnover dipped by 44.30 per cent, with $25.88 million recorded as against the $46.43 million posted on Friday last week.

This leaves the spread between the unofficial market and the I&E window exchange rate at N75.87, which translates to a gap of 15.61 per cent.

The CBN’s official rate on Monday was still N379 per dollar.