×
  • Business - Economy
  • Updated: May 25, 2021

CBN Devalues Naira, Adopts NAFEX Rate

CBN Devalues Naira, Adopts NAFEX Rate

The Central Bank of Nigeria devalued the naira by 7.6 percent against the dollar while it migrated toward a single exchange rate for the system.

Nigeria's apex bank has now replaced the fixed rate of N379/dollar, which has been used for official transactions with the NAFEX/I&E exchange rate of N410.25/dollar. Since the Central Bank last adjusted the exchange rate in August 2020, it has retained the exchange rate of N379/dollar on its website homepage which in the past, represented the official exchange rate. The exchange rate displayed on the website has historically been referenced as the official exchange rate of the country.

According to a report by the International Centre for Investigative Reporting, the multiplicity of Nigeria's exchange rate system has been a dampening factor against investors' confidence.

The unification of the two rates is now expected to improve the country’s currency-management system and help meet the conditions of the International Monetary Fund and investors for transparency.

All government transactions since 2021 have been converted using the prevailing exchange rate at the official NAFEX window, confirming that the erstwhile official exchange rate of N379/$1 was dead. The CBN’s adoption of NAFEX on its website confirms this is now Nigeria’s official exchange rate.

Nigeria had adopted multiple exchange rate regime to avoid an outright devaluation of the naira. The NAFEX, which acts as a spot rate, was introduced in 2017 to improve dollar liquidity and encourage inflows from foreign investors that were exiting the country following the 2016 economic crisis.

Related Topics

Join our Telegram platform to get news update Join Now

0 Comment(s)

See this post in...

Notice

We have selected third parties to use cookies for technical purposes as specified in the Cookie Policy. Use the “Accept All” button to consent or “Customize” button to set your cookie tracking settings