CBN Devalues Naira 8.5%, Adopts NAFEX Rate

CBN Devalues Naira 8.5%, Adopts NAFEX Rate

By Sahabi Abdul

The Central Bank of Nigeria officially devalued the naira by as much as 8.5 percent, ending days of uncertainty after it scrapped the former rate without a replacement.

The financial-system regulator is instead adopting the Nigerian Autonomous Foreign Exchange, or NAFEX, rate cuurently at 411.18 naira per dollar, which is generated in interbank trading. The former rate of 379 naira was scrapped from the CBN website on May 10.

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.