CBN frees the Naira as currency floats $1 for N700

The Central Bank of Nigeria, CBN, has leff the Naira out of control of rates, floating the currency in line with President Bola Tinubu administration’s policy.

Nigeria had maintained a tightly controlled official exchange rate as the country’s forex reserves hit new lows. While the CBN maintained an artificial rate of $1/N462, most people could not get the dollar at those rates.

The CBN created a list of 43 items for which importers could not access FX at official rates.

It also limited FX access for students traveling abroad access. Yet these workarounds didn’t solve the demand problem, forcing individuals and companies to head to the parallel market where prices rose to as much as $1/N755 this year.

It created a massive arbitrage opportunity, with the World Bank advising the Central Bank to merge its exchange rate windows on several occasions.

The Buhari administration boasted of improving the exchange rate prices before it was elected, and was reluctant to float the Naira. Instead, it blamed other players for the massive gap between official and black market rates.

CBN Governor Godwin Emefiele had blamed the rate aggregation site, Aboki Fx and other black-market operators for causing volatility in the FX markets.