The Central Bank of Nigeria (CBN) has reportedly told Deposit Money Banks to freely float the naira against the dollar and other international currencies.

This is as the naira trades at N730 to N755 per dollar at the Investors and Exporters (I&E) window on Wednesday.


Although the apex bank is yet to release an official statement on the matter, bankers and customers who traded in Foreign Exchange on Wednesday told Channels Television that the naira now trades between N730 and N750.

The development came just two weeks after President Bola Tinubu vowed to unify the exchange rates and remove fuel subsidy in his inauguration speech on May 29, 2023.

“Monetary policy needs a thorough housecleaning. The Central Bank must work towards a unified exchange rate,” the President had said. “This will direct funds away from arbitrage into meaningful investment in the plant, equipment, and jobs that power the real economy.”

The development is also in spite of the denial by the apex bank on June 1, 2023 that it had not devalued the naira to about 630 naira to a dollar.

Also, the development trailed the suspension of the Godwin Emefiele as the CBN Governor last Friday and his arrest by the Department of State Services on Saturday.

The implication of the development is that buyers and sellers of foreign currency in the official FX market are allowed to quote their preferred rates, as against previous practice where CBN dictate rates.

The new rate N755/$1 showed over 20% decline in the value of the naira compared to the previous rate of N463/$. At the moment, naira is now on a par with the dollar both at the I&E window and at the black market.

jmoore:
Too many economic time bomb at the same time.

mrvitalis:
Go and buy fuel now... Buy as much as you can safely store.... Fuel it's about to hit 850 minimum

mrvitalis:
Go and buy fuel now... Buy as much as you can safely store.... Fuel it's about to hit 850 minimum

Femmyfamous4u:
The market closed with 664/$ tonight.

Femmyfamous4u:
The market closed with 664/$ tonight.

001Lagos:
Policy somersault

I said it that Tinubu initial gragra will clear from his eyes .

All the nonentities hailing him should get ready to buy bag of rice for N60k

mrvitalis:
Go and buy fuel now... Buy as much as you can safely store.... Fuel it's about to hit 850 minimum

Flets:
Tinubu’s policies are utterly reckless. Mumu Nigerians hail textbook policies that don’t apply directly.

With limited supply of FX, floating the exchange rate means banks and speculators will determine the rates while CBN plays catch up. I project USD will hit 1000 naira in one month.

Fuel subsidy removal only frees up money for looting by the political vultures. Tinubu cannot stop the criminals that supported him to power. If in doubt, point me to the savings from diesel and kerosene subsidy stoppage.

As for stopping the funding for tertiary institutions and instituting student loans, it only means the poor cannot access tertiary education again. Forget the loan, the bureaucratic bottlenecks will ensure the average youth cannot access it.

Nigerians deserve all they get cos they can’t think.

001Lagos:
Policy somersault

I said it that Tinubu initial gragra will clear from his eyes .

All the nonentities hailing him should get ready to buy bag of rice for N60k

Iamgrey5:
Floating the exchange rate will bring competition and reduce inefficiency in the system.

Not floating the rate actually encourages corruption and gives speculators the opportunity to determine the exchange rate, while floating it means everyone can access the Dollars in a open market system operated by CBN.


Prices will be determined by forces of demand and supply.

Flets:


Forces of demand and supply will drive USD to 1500. We don’t earn enough fx for an import driven nation. Manufacturing is non-existent and we have very low exports. Our balance of trade is deficit. Textbook policies will not suffice here.

If I might ask, at what rate with CBN sell FX? Who will fix that rate or how will that rate be determined? If CBN will revert to market rate, then they will only be playing catch up with banks and speculators.

As long as Nigerians need Form A, M etc to buy USD from the banks, then it’s business as usual

Flets:


Forces of demand and supply will drive USD to 1500. We don’t earn enough fx for an import driven nation. Manufacturing is non-existent and we have very low exports. Our balance of trade is deficit. Textbook policies will not suffice here.

If I might ask, at what rate with CBN sell FX? Who will fix that rate or how will that rate be determined? If CBN will revert to market rate, then they will only be playing catch up with banks and speculators.

As long as Nigerians need Form A, M etc to buy USD from the banks, then it’s business as usual

Iamgrey5:
Where exactly will this demand for dollars come from to crash the Dollars?

You mean Nigerians will simply become richer than ever to Begin to buy dollars more than before?


Bruv, just like the Artificial demand for fuel because of subsidy, there's also an artificial demand for Dollars because it's subsidize by CBN at the expenses of developmental funds.

When the dollars is floated like it's before the advent of Buhari, we will realize why the Dollars went from 140 under Jonathan to 800 Naira under Buhari in 8years.

There's no way a floated currency drop that much when Nigeria is not being sanctioned by western powers or going through a war.

Iamgrey5:
Where exactly will this demand for dollars come from to crash the Dollars?

You mean Nigerians will simply become richer than ever to Begin to buy dollars more than before?


Bruv, just like the Artificial demand for fuel because of subsidy, there's also an artificial demand for Dollars because it's subsidize by CBN at the expenses of developmental funds.

When the dollars is floated like it's before the advent of Buhari, we will realize why the Dollars went from 140 under Jonathan to 800 Naira under Buhari in 8years.

There's no way a floated currency drop that much when Nigeria is not being sanctioned by western powers or going through a war.

Flets:


It’s not that simple. Foreign exchange is not something you fix in your room and expect the world to abide by. Nigeria must have a product or service to offer the globe in exchange for the FX. None of that has changed and our export volumes are stagnant.

What is Nigeria’s balance of trade to the point of floating fx?, I am not saying that the gap between CBN rate and parallel market market should be left as is … definitely, efforts should be made to bridge the gap through devaluation, more USD supply and relaxing some of the fx transaction restrictions

For Nigeria to conveniently float the rates, we must get our balance of trades rights. Until then, the CBN must have some control over the rates. The parallel market is sustained by real fx demands which you can’t wish away.

I will quote you in 2 months when USD exchanges for 1000 naira

Flets:


Until Nigeria significantly reduces its fx demands through functional refineries and improved manufacturing/ exports…….. this floating policy is bound to fail.

Investors will be happy, the system will be explored and messed. Nigeria will happen to it, it ain’t sustainable