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CBN clarifies “floatation” of Naira as value plunges at parallel market
The current monetary policy decision made is a controlled float, not a free float, according to the Central Bank of Nigeria (CBN).
Deputy Governor Kingsley Obiora disclosed that the Central Bank of Nigeria confirmed its most recent monetary policy decision in a recent interview with Bloomberg in Rabat, Morocco.
The deputy governor also cautioned against assessing whether the naira to dollar exchange rate had fallen to its lowest level, speculating that it might still be too early to do so.
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In the interview, Obiora said that Nigeria intends to announce additional steps to relax foreign exchange restrictions and that Nigerians may anticipate more policy changes “in the next couple of weeks.”
He added that the CBN has not intervened in Nigeria’s FX markets since the new policies were introduced.
The CBN official said, “We are allowing the market itself to set a price.”
He also noted that it has no plans to set the Naira on a totally free float, as no country runs a completely free float, the report said:
“There is no country in the world, even the US, that has a completely free float,” he said.
“It may be too early to determine if the naira’s exchange rate to the dollar has bottomed out.”
Obiora cited reports by the IMF that suggest that the naira should not be as weak as the parallel market indicated, adding that he expects that the supply of foreign exchange will eventually be unlocked once the price of the dollar reaches a level that both buyers and sellers consider “fair.”
