Naira has fallen to an all-time low on the official market, selling above N800/$1 under Tinubu.
Newsone reports that the exchange rate between the Nigerian official currency, Naira, and the United States Dollar sold for an intra-day high of N815/$1 at the official Investor & Exporter Window on Wednesday, June 21, 2023.
This online news platform understands that the dollar to naira exchange rate today is the highest rate traded for the dollar on the official market since 2018 when the window was launched.
Newsone Nigeria reports that this is the first time under the new administration of President Bola Ahmed Tinubu that the has fallen this low against the United States dollar on the official market since the Central Bank of Nigeria (CBN) floated the Naira.
Last week, the Central Bank of Nigeria (CBN) directed banks to remove the cap on the investors’ and exporters’ (I & E) window of the forex market to allow for the free float of the naira exchange rate.
In a recent interview with Bloomberg in Rabat, Morocco, Kingsley Obiora, CBN Deputy Governor disclosed that the recent monetary policy decision implemented is not a free float but a managed float.
Obiora also expressed caution in determining whether the exchange rate of the naira to the dollar has reached its lowest point, suggesting that it may still be too early to make such a determination.
The deputy governor stated that Nigeria plans to announce further measures to loosen foreign exchange controls, in the interview, stating that Nigerians should expect more policy changes “in the next couple of weeks.”
He added that the CBN has not intervened in Nigeria’s FX markets since the new policies were introduced, adding: “We are allowing the market itself to set a price.”
The CBN chief noted that it has no plans to set the Naira on a totally free float, as no country runs a completely free float, the report said:
“There is no country in the world, even the US, that has a completely free float. It may be too early to determine if the naira’s exchange rate to the dollar has bottomed out,” he stated.
Meanwhile, Newsone reports that the disparity between the black market and the official exchange rate market closed again on Wednesday with the official rates closing at N763/$1. This was close to the black market rate which sold for between N760-N770/$1 depending on who is buying or selling.
On Monday, June 19th, the official and parallel market rates first achieved convergence when they closed at N770.38. By achieving exchange rate parity for the third consecutive day, analysts believe the official rate has crossed a critical first step in price discovery.
The three major phases to price discovery are the transition phase, speculation and adjustment phase, and the intervention phase.