CBN removes N379/$1 official rate from website, begins gradual harmonisation of exchange rates

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The Central Bank of Nigeria (CBN) has removed the exchange rate of N379/$1 from its website homepage conforming with the bank’s policy that the NAFEX rate is now the default reference exchange rate for official and legitimate transactions.

This is coming after Nigeria’s official currency, the Naira, traded at a record low against the dollar at the official NAFEX window on Friday, May 14 confirming a move by the CBN to unify multiple exchange rates.

The Central Bank last adjusted the exchange rate in August 2020 and has retained the exchange rate of N379/$1 on its website homepage which in the past, represented the official exchange rate. The exchange rate displayed on the website has historically been referenced as the official exchange rate of the country.

However, all government transactions since 2021 have been converted using the prevailing exchange rate at the official NAFEX window confirming that the erstwhile official exchange rate of N379/$1 is dead with sources saying it is the official exchange rate recognized for transactions between parties and used by the Federal and State Government when monthly allocations are shared.

Nigeria currently has multiple exchange windows which have caused a lack of clarity for investors who are worried about currency risk.

The World Bank has also urged the government to unify its various windows before the $1.5 billion budget support loan to Nigeria is disbursed.

The CBN has been trying to unify the rates and boost the dollar supply through direct interventions and recently extended an incentive offer last week to recipients of dollar remittances to try to encourage more inflows from the Nigerian diaspora.

Moving forward, the removal of foreign exchange restrictions, and full exchange rate unification in line with the authorities’ Economic Recovery and Growth Plan (ERGP), will help keep the parallel market premium low in a more sustained manner.

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