Nigeria moves to unify currency exchange as naira slips at official window
Nigeria plans to unify the naira exchange rates in a bid to increase government revenue earnings from its foreign exchange inflows from exports, the minister of finance and budget has said just as the local currency slider further on the official window.
Report by Reuters showed that the naira opened 6.2 percent down against the dollar on the official market on Wednesday as traders quoted the currency close to the over-the-counter spot market rate.
The naira traded at N385 per dollar on the official market, supported by the central bank on Wednesday, before recovering to N361, where it closed on Tuesday, data from Refinitiv Eikon showed.
The central bank did not immediately respond to a request for comment.
The decline in the naira exchange rate to the dollar was fuel by the information that the Central bank of Nigeria (CBN) may embark on measures to conserve dwindling reserves.
The agency quoted the finance minister Zainab Ahmed as saying that the government would seek to unify the exchange rates to generate more naira from its foreign inflows and manage the rate in a sustainable manner.
It said the finance ministry would also direct oil firms to sell dollars to the CBN as opposed to the Nigerian National Petroleum Corporation (NNPC) Ahmed said, adding that the government would deregulate petroleum prices as part of measures to safeguard oil revenues.
The policies will be implemented over a 12 month period, the document said.
Nigeria has operated a multiple exchange rate regime used by the central bank to manage pressure on the naira. But dollar shortages have plagued the economy after the coronavirus-induced oil price crash slashed government revenues and weakened the local currency.
The currency has been hitting new lows on the black and over-the-counter spot markets since March after the central bank adjusted its official rate, implying a 15 percent devaluation.
The naira was quoted at N452 on the black market on Wednesday, while the longest five-year currency futures contract quoted it at N578.69.