Breaking: Finally, CBN Throws Naira Open

Nigeria’s central bank said it will allow the naira exchange rate to be market-driven, setting the stage for a devaluation of the currency when the new system comes into effect June 20.

The Central Bank of Nigeria will select a group of around 10 primary dealers through which the naira will be traded, reports Bloomberg. There will only be one exchange rate and the bank will intervene in the market “as the need arises,” Governor Godwin Emefiele told reporters in Abuja, the capital, Wednesday.

“We’re talking about an open, transparent two-way system,”

Emefiele said. “It’s intended we don’t have speculators and rent-seekers. I don’t expect that any other exchange rate will be recognized.” Three-month non-deliverable naira forward contracts surged as much as 9.5 percent to a record 333 per dollar after the announcement, suggesting traders expect the currency to trade around that level in the market, compared with the current official rate of 199.

Emefiele has faced calls for more than a year to devalue the currency, as other oil exporters from Russia to Kazakhstan and Angola have done, amid a rout in crude prices since mid-2014 to around $50 a barrel. Investment into Nigeria has shriveled as foreigners are put off by capital controls needed to defend the currency’s peg of 197-199 per dollar, while local businesses have struggled to import raw materials and equipment.

Emefiele said last month the central bank would implement a “flexible” exchange-rate policy to help alleviate a dollar shortage that has strangled the economy. Gross domestic product contracted in the three months through March for the first time since 2004 and inflation accelerated to 15.6 percent in May, the highest rate in more than six years, as manufacturers struggled to import raw materials and equipment.

The naira will probably trade in a range of 280 to 350 against the dollar after the central bank implements its decision, analysts at Johannesburg-based Rand Merchant Bank said in a note on Wednesday before the announcement.

So what was all the stubbornness for?
We should have allowed this to happen last July or August 2015. We would not have wasted $10 billion dollars defending the 198 exchange rate, all the companies that left out of frustration would have remained and all the economic crises and corruption the crazy policy caused would have been avoided.

now they want to find a solution to a spilled milk?

cjrane:
So what was all the stubbornness for?
We should have allowed this to happen last July or August 2015. We would not have wasted $10 billion dollars defending the 198 exchange rate, all the companies that left out of frustration would have remained and all the economic crises and corruption the crazy policy caused would have been avoided.

i tire ooo

Only way to survive now is to look for something to export.

For those in the service industry, this situation is going to be an interesting challenge. Nigerians will pay more for engine oil, tomato, cornflakes, roasted corn etc, but they simply dont want to pay more for intangibles like the preparation of a document for example.

This Govt will lead us to no destination. Everything in the face of this Govt is opposition even the economy they were voted to manage.

Buh the needful wuld bin carried out ever since na

ayemerbarth:
This Govt will lead us to no destination. Everything in the face of this Govt is opposition even the economy they were voted to manage.

That is if buhari will listen and stop deliberate classification of citizens!