At the Nigerian autonomous foreign exchange (NAFEX) rate – the default FX reference for official and lawful transactions — the Nigerian naira has plunged by 2.6 percent to N422 per dollar, a new all-time low.
The NAFEX rate is the current rate in the investor and exporters (I&E) window, which was designated as the country’s official forex market by the Central Bank of Nigeria (CBN) in May 2021.
The dramatic drop happened just days after Vice-President Yemi Osinbajo urged the Central Bank of Nigeria (CBN) to allow the naira to reflect market realities.
The currency rate, according to Osinbajo, is artificially low, discouraging investors from bringing foreign exchange into the country.
“Prof. Osinbajo is not calling for the devaluation of the Naira. He has at all times argued against a willy-nilly devaluation of the Naira,” Laolu Akande, spokesperson to Vice-President had explained in a statement.
“For context, the Vice-President’s point was that currently, the Naira exchange rate benefits only those who are able to obtain the dollar at N410, some of who simply turn round and sell to the parallel market at N570.
“It is stopping this huge arbitrage of over N160 per dollar that the Vice-President was talking about. Such a massive difference discourages doing proper business, when selling the dollar can bring in 40% profit!
“This was why the Vice-President called for measures that would increase the supply of foreign exchange in the market rather than simply managing demand, which opens up irresistible opportunities for arbitrage and corruption.
“It is a well-known fact that foreign investors and exporters have been complaining that they could not bring foreign exchange in at N410 and then have to purchase foreign exchange in the parallel market at N570 to meet their various needs on account of unavailability of foreign exchange.”
According to checks conducted on Thursday, the local currency, which began trading at an indicative price of N413.50 per dollar, sank to N422 at the end of the day.
The naira rose as high as N436 per dollar on the spot during intra-day trading, while selling for as low as N404/$1. At the window, it was quoted as high as N446 and as low as N419.88 to the dollar on the futures side (futures contracts).
“The rate is guided by the CBN — it is supposed to be flexible but not,” a banker said.
“When the market moves, it usually moves in a big way. I think he moved from N380 to N411 at a point.”
The currency stayed constant at N570 per dollar on the parallel market.
