Devaluation: CBN auctions dollar at N645

Days after the Central Bank of Nigeria denied Daily Trust’s report that devaluation may be in the cards, it auctioned dollars, Wednes…

Days after the Central Bank of Nigeria denied Daily Trust’s report that devaluation may be in the cards, it auctioned dollars, Wednesday, at N645 apiece – a rate that was almost 30% weaker than on the tightly controlled official market.

According to Bloomberg, the naira sank to a record low yesterday, as the CBN battled with heavy demand from industries and importers for the greenback.

Daily Trust had exclusively reported, last week, that the apex bank auctioned dollars for N631 from N461.6 it sold at the Importers and Exporters (I&E) window days before the inauguration of President Bola Ahmed Tinubu.

In official trading on the Nigeria Exchange, the naira, yesterday, slipped as much as 0.7%, the most in almost six months before paring losses to N467.04  a dollar as of 2:40pm local time — a record low, added Bloomberg.

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The report added that Nigeria’s dollar earnings and reserves are dwindling and the government uses multiple exchange rates to manage supply and demand for foreign currency.

Most residents who can’t get hold of the greenback on the main market or at auctions are forced to turn to black market trading where the naira is about 40% weaker.

Tinubu had announced plans to adopt a uniform exchange rate during his inauguration on May 29 as part of measures to boost investment and grow the economy.

“The president has said we don’t need all those windows, so it’s a question of time for the currency to find its real value at the official trade,” Adetilewa Adebajo, economist and chief executive with Lagos-based CFG Advisory told the US-based media network.

CFG Advisory expects the currency to trade at about N650 a dollar following devaluation, Adebajo said.