By our Reporter
The Central Bank of Nigeria has directed Deposit Money Banks to remove the rate cap on the naira at the official Investors and Exporters’ Window of the foreign exchange market, to allow for a free float of the national currency against the dollar and other global currencies.
This action is coming after President Bola Tinubu promised to unify the nation’s multiple exchange rates, and less than a week before the suspension and detention of CBN Governor Godwin Emefiele whose unorthodox monetary policies had become a stumbling block to investors and the economy.
The CBN’s decision to float the currency was hailed by the organised private sector and economists who said the move would unify the country’s multiple exchange rate and bring sanitise the FX market
The development indicated that buyers and sellers of foreign currency in the official FX markets are now allowed to quote rates they find comfortable in the FX market, as against the previous practice where rates were dictated by the Central Bank of Nigeria.
Following the development, the naira depreciated to N664.04/dollar at the close of trading at the I&E Window on Wednesday, according to data from the FMDQ Securities Exchange.
This action implies a 40.97 per cent decline in the naira value compared to the 471/dollar rate which the national currency closed at the I&E Window on Tuesday. Data from the FMDQ Exchange showed that trading at the I&E forex window opened at 473.83/$ before closing at 664.04/$. A total turnover of $193.33m was recorded.
The naira had always closed below N480/dollar at the I&E Window over the years.