The Central Bank of Nigeria (CBN) on Tuesday said the country’s official exchange rate would not be determined by what happens at the parallel market where the naira value has weakened sharply in the last two weeks.
Godwin Emefiele, who was answering questions from journalists on the rationale behind the decision of the Monetary Policy Committee (MPC) said the official exchange rate would not trail the parallel market rate.
“We do not agree that the determining factor for our currency should be based on a market that is tainted, where people go to offer bribes,” Emefiele said.
“The black market is illegal where people do not provide documentation to support transactions. It is unfortunate and unfair for analysts to say Nigeria’s exchange rate is at 480 per dollar,” the Governor said.
Nigeria’s currency has depreciated on the parallel market by 4.12 percent to N480 to the dollar this month, from N461 to the dollar in opened the month.
The naira has been stuck at N379 to the dollar on the CBN window while the local currency traded at N466 to the dollar on the Investors’ and Exporters’ (I&E) forex window on Tuesday.
The central bank has not been able to sustain the supply of dollars to the domestic forex market due to fast depleting foreign exchange reserves.
The dollar shortage in the official window has led to the diversion of forex demand by importers to the parallel market, driving up the naira rate at the market.
Emefiele assured of the commitment of the CBN to maintain the stability of the local currency in spite of the dwindling forex reserves.
The CBN retained its benchmark interest rate at 11.5 percent, cash reserves at 27.5 percent and liquidity ratio at 30 percent at the end of its Monetary Policy Committee (MPC) meeting on Tuesday.