The Central Bank of Nigeria (CBN) has debunked claims that it would crash the exchange rate to N1.25/$1.
Reports had circulated online claiming that the apex bank would “introduce a new naira policy by November 2023” which would see the foreign exchange rate to be $1=N1.25.
Debunking the news via a tweet on X-app, the apex bank attached screenshots of the report tagged “fake news” and noted that “the attached message currently circulating on social media is false and should be disregarded.”
Foreign Exchange Rate Reforms
The Central Bank of Nigeria had implemented various policies since President Bola Tinubu was inaugurated on May 29th 2023.
In June 2023, the apex bank gave commercial banks and dealers in the forex market the green light to sell forex freely which is at a market-determined rate.
This was in line with the promise of President Bola Tinubu to unify the multiple exchange rate in the market.
CBN had also announced the unification of all segments of the forex market collapsing all windows into one.
This was part of a series of immediate changes to operations in the Nigerian Foreign Exchange (FX) Market, in a bid to improve liquidity and stability.
The devaluation of the naira has pushed the price of the dollar in the investors’ and exporters’ (I&E) window of the official market from N461.50/$1 on June 13, to N742.10/$1 as of Tuesday while the rate at the parallel market is N927/$1 as at today.
Central Bank of Nigeria (CBN) had issued a new circular stopping banks from recklessly spending gains made from forex revaluation.
This was done in a bid to bolster the Nigerian banking sector amid volatile foreign exchange (FX) rates.
Nigerian banks mostly reported massive profits in the half-year results mostly arising from the depreciation of the naira following the unification of exchange rate windows.
The depreciation increased the balance sheet of the banks in naira based on their forex holdings. The apex bank fears that banks could be tempted to spend the profits making them vulnerable if the exchange rate strengthens.