Daily Trust exclusively reported a Naira devaluation in the early hours of Thursday. Nigeria’s Central Bank has denied that any such devaluation happened.
Nigeria’s Central Bank has denied reports of a devaluation of the Naira that made the rounds this morning. A tweet from the CBN’s handle said, “CBN did not devalue the Naira,” alongside a picture of the front page of a Nigerian newspaper. The Nigerian publication, Daily Trust, exclusively reported this morning that “the CBN devalued the Naira to 630/$1.” The publication based its story on a rate it obtained from the Importers and Exporters window. However, it would seem that the I&E rate that led Daily Trust to believe that a devaluation had occurred was a single, one-off transaction.
At the time of this report, TechCabal confirmed that Stanbic IBTC bank, one of Nigeria’s leading banks, has quoted today’s official exchange rate at N464/$1. It means that there have been no official changes in the FX rates.
The devaluation reports undoubtedly have their roots in Bola Tinbubu’s swearing-in speech, where he confirmed that his administration will address the current FX policy. Nigeria operates a multiple exchange window, with the official rates (N464) trading well below the parallel market rate (N750). Tinubu’s intention to address the FX policy is curious, given that it is the purview of an independent Central Bank.
Nevertheless, the Central Bank has repeatedly been advised by the World Bank to unify the exchange rates. The World Bank and many other leading economists say that multiple exchange rates lead to uncertainty and create room for arbitrage. Nonetheless, the CBN has held firm, retaining a pegged exchange rate. Still, it appears that it may change that position, given Bola Tinubu’s swearing-in speech.
The new President began by declaring an end to fuel subsidies, with the country’s petroleum corporation announcing new and increased fuel prices on Wednesday. That move, alongside an earlier report by Bloomberg that a 15% devaluation of the Naira is among Tinubu’s earliest priorities, may have led observers to believe that the now-debunked news of the devaluation.
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