Foreign exchange adjusted to N380/$ at I&E FX window
Following the effects of the COVID-19 outbreak on the global economy, leading to a sharp drop in oil prices, the Investor/Exporter (I&E) FX window has been allowed to reflect market realities, as the nation’s currency, Naira, now stabled at N380 per US Dollar.
This development, however, indicated that the local currency has been technically depreciated against the dollar. For instance, the Naira drops in value at the I&E FX trading window from N366.70 to N380.20.
“Although, there is no official statement by the Central Bank of Nigeria (CBN), but an unofficial source at the apex bank has said, “we allowed the Naira to mirror developments in the market as determined by in the Investor/Exporters window.
“All I am saying is that there is adjustment in the Investor/Exporters window of the market to reflect development foisted on the market by the covid-19 crisis.”
Meanwhile, the move is expected to sustain foreign portfolio investors’ interest in Nigeria’s financial instruments. Nigeria like other countries mainly dependent on crude oil to fund expenditures have been under tremendous pressure since the price of the commodity crashed from $67pb to about $27pb.
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The CBN still operates multiple exchange rate windows, the source added.
The CBN’s website has N307-$1 as the official rate, while it still sells to licensed changers at somewhere around N357-$1. Banks trading at the Investor and Exporter (I&E) window bought dollars at N360/$1 from the CBN on Friday, March 20, 2020.
The I&E window is the official market where forex is traded between banks, the CBN, foreign investors and businesses. The central bank typically buys or sells in the market as part of its intervention program.
The central bank in a press release last week said that the “market fundamentals do not support Naira devaluation at this time” detailing reasons why it did not need to devalue. Having sold at N380 at the I&E window the CBN has officially accepted the exchange rate has now depreciated officially in line with a drop in oil price.
The Brent crude fell below $30 this week as oil prices continued their recent slide in the wake of the price war between Saudi and Russia.
The CBN however still retain the N307/$1 as its official exchange while the exchange rate is still N366/$1 for personal travels. Nigeria maintains a multiple exchange rate regime with forex sold at several windows.
