The Naira has reportedly been devalued by the Central Bank of Nigeria to N640 to a dollar, from N461.6 sold at the Importers and Exporters (I&E) window the previous day.
The Naira was devalued barely 48 hours after President Bola Tinubu announced his plan to unify the country’s exchange rate to stimulate the economy.
A wide margin between the I&E window and the parallel market otherwise known as “black market”, has encouraged round-tripping with Bureau de Change operators.
Daily Trust reported that CBN Governor, Godwin Emefiele discussed the issue of the exchange rate at a meeting with Tinubu on Tuesday, May 30.
The publication reported that at the resumption of the weekly bidding for foreign exchange shortly the meeting was held on Tuesday, the apex bank sold the spot rate to banks on behalf of their customers at N631 to a dollar and most bidders got the full amount they requested.
A customer revealed that their request was fully granted at N631 as against N461.6. The move has also seen prices at the parallel market trend downwards. Prices dropped from N750 to a dollar in the early hours of yesterday to N745 by evening in Abuja and Kano respectively.
From 2020 to 2022, the CBN spent about $42 billion intervening in the foreign exchange market to stabilise the naira. The amount was sold to the end-users, including students and tourists, at the official rates, which are way off the effective exchange rate of the naira.
According to the Financial Stability Report, a publication of the CBN, the apex bank sold $9.2 billion in the market in the first half of last year.
The full data for the second half are not available, but the annualised value is assumed to have surpassed that, especially with the level of social and economic activities associated with the second half.
Whereas the black market rate averaged N730/$, the I&E window finished at suppressed N447/$ on average. That puts the arbitrage at N283/$, pushing the CBN’s FX subsidy in the year to about N3.65 trillion.