Naira plummets by 40.8% as CBN abolishes multiple exchange rates

Nigerian Naira
Nigerian Naira

Naira plummets by 40.8% as CBN abolishes multiple exchange rates

The Nigerian Naira experienced a significant decline, losing 40.8% of its value against the US Dollar in the Investors and Exporters (I&E) segment of the official market.

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This depreciation comes in the aftermath of the Central Bank of Nigeria’s (CBN) decision to float the currency and eliminate multiple exchange rates.

The move aligns with President Bola Tinubu’s directive to unify the exchange rates in the market, allowing market forces to determine the value of the Naira.

CBN devalues Naira to 630/$1

On Wednesday, June 14, 2023, the Nigerian Naira witnessed a substantial drop in value following the CBN’s decision to float the currency and abolish multiple exchange rates. The official exchange rate soared to a high of N791 per US Dollar, indicating a depreciation of 40.8% compared to the rate of N461.67/$1 recorded the previous day.

During Wednesday’s trading session, traders, exporters, and foreign investors were compelled to pay as much as N791 to acquire a single US Dollar at the official market rate. The day’s lowest rate stood at N461 before settling at N664 to a dollar by the end of trading.

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Simultaneously, in the parallel market, the Naira weakened further against the US Dollar, with the exchange rate depreciating by N3 to reach N753/$1, in contrast to the previous rate of N750/$1. However, in the Peer-2-Peer (P2P) window, the Naira remained relatively stable, maintaining a rate of N768/$1.

The CBN’s decision to float the Naira reflects the government’s commitment to reforming its foreign exchange policies and fostering transparency in the market. This move aligns with President Bola Tinubu’s inaugural promise to address the issue of multiple exchange rates and implement measures to streamline the foreign exchange system.

In a related report, Legit.ng provided a profile of the new acting CBN governor, Folashodun Adebisi Shonubi, outlining his career journey. President Tinubu considered Shonubi as one of the potential candidates for the role, alongside three other deputy governors: Aisha Ahmed, Edward Adamu, and Kingsley Obiora. As per the law, one of the deputies is expected to complete the tenure of the former governor, Godwin Emefiele, which was initially set to expire in May 2024.

The Nigerian Naira’s significant decline against the US Dollar, prompted by the CBN’s decision to float the currency and abolish multiple exchange rates, underscores the government’s commitment to reforming the foreign exchange system.

President Tinubu’s directive to unify the exchange rates aims to create a transparent and market-driven system. The appointment of the new acting CBN governor, Folashodun Adebisi Shonubi, signifies a step toward implementing these reforms.

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