The Central Bank of Nigeria (CBN) is expected to announce details of the much anticipated ‘flexible’ foreign exchange rate policy today, 15th of June, 2016.
National Daily sources at the apex bank said an announcement by Governor Godwin Emefiele will be made in Abuja, having concluded consultations with various stakeholders on the policy.
As part of the new policy, the CBN will allow market forces determine the exchange rate between the naira and other currencies but may retain a small intervention window to allow it intervene in some instances ‘critical’ to the nation’s economic growth and will apply foreign exchange at an adjustable rate between N230 and N250, depending on the rate in the market.
“The bank would, however, retain a small window for funding critical transactions. The Naira will be officially devalued tomorrow and going forward, the exchange rate will be market-driven as done anywhere else in the world,” a source with knowledge of the policy said on condition of anonymity.
The CBN had set the official rate at between N197 and N199 but the scarcity of foreign exchange due to the crash in the global price of crude oil, which accounts for the bulk of the nation’s foreign exchange inflow, has forced the Naira down at the parallel market (black market) to between N365 and N370, mostly due to speculative trading in anticipation of the implementation of the new policy.
Analysts are positive that the new policy would stabilize the forex market, calm nervous foreign investors and ease the flow of foreign exchange in and out of the country.