In a possible policy shift, the Central Bank of Nigeria (CBN) recently allowed the local naira currency to briefly drop to a new low of USD$1 for 419.75 nairas on May 14, 2021. However, by close of business the naira had recovered and was trading around 411.25. Before the latest adjustment, the naira had fluctuated between 380 and 381 to the dollar since July last year.
Unifying Multiple Exchange Rates
Meanwhile, a report in the Nigerian media has speculated that the seeming devaluation of the naira indicates that the CBN is now working towards “unifying multiple exchange rates.” According to the report, Nigeria operates multiple currency regimes and this often frustrates businesses. Consequently, some institutions including the World Bank have called for the unification of rates in order to attract investment into the West African state.
In the meantime, the Nigerian apex had (in addition to allowing markets to determine the exchange rate) already stopped availing data on the naira’s official rate since May 11, 2021. It is these moves that have prompted some Nigerian economic experts to speculate on the CBN’s next possible moves. In the report, one currency trader is quoted saying:
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