Supply scarcity has exacerbated the Naira’s weakness, as the CBN halted foreign exchange sales through bureaux de change in March following the closure of international airports. Likewise, the hitherto stable bureaux de change rate-which serves individuals needing foreign exchange for personal and business travel, payment of school fees abroad and foreign medical treatment-has depreciated more than 30% over the past five months, from N360 per dollar to N475. While the I&E window has been generally regarded as the more liberal market, the CBN devalued the NAFEX Fixing in March, driving down the prevailing rate from N366.70 to the dollar to N380.20. One of the most liquid segments of the Nigerian foreign exchange market, it has attracted over US$95billion in inflows since its establishment in April 2017. Critics have warned repeatedly that Nigeria’s fragmented exchange rate system-which offers multiple rates at different windows-is one of the fundamentals driving speculative demand and arbitrage pressures.Īpart from the official rate, the most prominent Naira exchange rate is the Investors’ and Exporters’ (I&E) rate, otherwise known as the NAFEX Fixing, which serves investors and exporters. While it is not clear now how far the currency will fall, some close observers say it could weaken to as low as 500 Naira per 1 USD officially.Īs a part of its effort to stem the Naira’s slide and reinvigorate confidence in the currency, the CNB has embarked on what it terms exchange rates unification or convergence. In the coming weeks or months, the Naira may be primed to lose more of its purchasing power. dollar to 379 on August 21, according to data from the Central Bank of Nigeria (CNB), for a roughly 24.3% decline.
In the five months between March and August of this year, Nigeria’s currency, the Naira, fell by nearly a fifth of its value on the official exchange rate window, from 305 to the U.S.
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