The Central Bank of Nigeria (CBN) has devalued the naira by 7.6% against the dollar in order to migrate toward a single exchange-rate system for the local currency.
The apex bank replaced the fixed rate of N379/$1 used for official transactions with the more flexible Nafex, also known as the investors and exporters exchange rate, which averages N410.25/$1 this year, according to data on its website on Tuesday.
“We found out that we were no longer dealing in this so-called CBN official rate for transactions,” Governor Godwin Emefiele told reporters during the monetary policy briefing earlier on Tuesday. “We are still running a managed-float, we are monitoring the market and seeing what is happening for us to ensure that the right things are happening for the good of the Nigerian economy.”
A Bloomberg survey showed that CBN held an interest rate at 11.5% in line with the median estimate.
Nigeria adopted multiple exchange-rate schemes to avoid an outright devaluation of the naira. This would keep a stronger pegged rate for official transactions and weaker exchange for non-government related transactions.
This currency management system has been criticized by the International Monetary Fund, pointing to the reason the World Bank held back a $1.5 billion loan in a bid to push for more foreign exchange reforms.