CBN plans to unify exchange rates after debiting banks N122bn

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By Usman Sulyman

The Central Bank of Nigeria (CBN) has debited a sum of N122bn ($338m) from banks’ excess cash with the apex bank before weakening the currency at a retail auction on Friday in a bid to unify its multiple exchange rates.

The Ravens learnt that Nigeria’s multiple foreign-exchange rates were imposed to manage dollar demand after oil prices crashed.

The bank had earlier hinted of its plans to unify the multiple exchange rates to generate more local currency from its dollar inflows and further achieve naira stability.

The apex bank, which is Nigeria’s main forex supplier, asked lenders to bid for dollars at N380 to the dollar on Friday, five per cent above its official rate.

The naira, however, opened weaker at 387 against the dollar on the over-the-counter spot market widely quoted by investors and importers. It further weakened to N462 at the black market on Monday.

The currency had come under pressure in recent months after the coronavirus pandemic and a fall in price of oil, Nigeria’s main export, and as foreign investors exited, leaving the country with large financing gap.

The fall in oil price had caused dollar shortages on official markets, shifting demand to the black market, where the naira is much weaker.

 

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