The Central Bank of Nigeria (CBN) has technically devalued the Naira exchange rate on the Investors and Exporters’ (I&E) window from the N366.7 to N380.20 to a dollar. This is as a result of the drastic drop in crude oil price to below $30 per barrel.
A management source at the CBN, who prefers anonymity, confirmed this to Daily Trust this evening. Further clarification as obtained from trading data from Bloomberg states: “Dear all, kindly be informed that the CBN has moved the rate of FX sales to FPIs from N366.70 to N380.20/$. We will advise as developments unfold,” traders were advised on the Bloomberg terminal.
Trading data from Bloomberg terminal showed that there was very low appetite for the CBN open market operations (OMO) instruments offered today, suggesting that foreign portfolio investors have since adopted a wait-and-see approach to the raging COVID-19 pandemic.
This is the highest official exchange rate between the dollar and Naira in over two years suggesting a devaluation is in the offing. The central bank, in a press release last week, said that the “market fundamentals do not support Naira devaluation at this time,” detailing reasons why it did not need to devalue.
Having sold at N380 at the I&E window, the CBN has officially accepted the exchange rate has now depreciated officially in line with a drop in oil price. The Brent crude fell below $30 this week as oil prices continued their recent slide in the wake of the price war between Saudi Arabia and Russia.
Afrinvest West Africa Limited had predicted Naira devaluation in the second half of the year unless there is a drastic increase in oil prices. The group managing director of the company, Mr. Ike Chioke, made the projection in Lagos in January during the launch of Afrinvest Economic and Financial Markets 2020 Outlook.