Markets Await CBN Clarity on Exchange Rate

Markets Await CBN Clarity on Exchange Rate

By Sahabi Abdul

Nigeria’s financial markets are awaiting clarity from monetary authorities on the latest dollar exchange rate after the Central Bank of Nigeria failed to update the official rate in the past one week.

The official exchange, which stood at 379 naira to a dollar since it was last devalued, was removed from the CBN website last week. On the Financial Market Dealers Association FMDQ platform, the rate hasn’t been updated since May 10. CBN officials haven’t commented on why the rate hasn’t been updated recently.

Nigeria has been under pressure from the World Bank to abolish its multiple exchange-rate system in favour of a single rate, citing shortcomings such as corruption and distortions to pricing. Unifying the multiple exchange rates was a condition for the $1.5 billion loan recently approved for Nigeria by the World Bank.

While the government was able to rebuff World Bank and International Monetary Fund criticisms for its exchange practices since 2016, it’s become more vulnerable since the coronavirus pandemic as the price of its main export, crude oil, plunged. As the country took a loan of $3.4 billion from the IMF last year and sought additional ones from the World Bank, it pledged to pursue exchange-rate unification.