CBN denies plans to crash exchange rate to N1.25/$
By Sodiq Adelakun
The Central Bank of Nigeria (CBN) has denied rumors of a new naira policy that would crash the dollar exchange rate to N1.25/$.
A report circulating online claimed that the apex bank was considering a new foreign exchange (FX) policy scheduled for November 2023.
The alleged policy aimed to anchor inflation expectations, facilitate conversion to major currencies, reverse currency substitution, and eliminate higher denomination notes with lower purchasing power.
As of Tuesday, the exchange rate stood at N742.10 to the dollar at the investors’ and exporters’ (I&E) window, which is Nigeria’s official FX market.
However, the CBN released a statement on Wednesday, accompanied by a screenshot of the report, refuting its claims and labeling it as false.
The Central Bank urged the public to disregard the circulating message. Since President Bola Tinubu assumed office at the end of May 2023, the CBN has implemented various policies to reform the FX market.
These policies include lifting restrictions on deposits into domiciliary accounts and unifying the multiple exchange rate systems, resulting in the devaluation of the naira.
The devaluation of the naira has caused the price of the dollar in the I&E window to rise from N461.50/$1 on June 13 to N742.10/$1 as of Tuesday.
The CBN’s efforts to reform the FX market aim to stabilise the currency and attract foreign investment. The denial of the rumored new naira policy suggests that the CBN is not planning to further devalue the currency or introduce drastic changes to the exchange rate.
However, it remains to be seen how the Central Bank will continue to address the challenges in the FX market and manage inflation expectations.
The CBN’s statement serves to reassure the public and market participants that there are no immediate plans for a significant shift in the exchange rate. It also highlights the importance of verifying information before spreading it on social media platforms.
As Nigeria’s Central Bank, the CBN plays a crucial role in managing the country’s monetary policy and ensuring the stability of the financial system. Its actions and policies have a direct impact on the exchange rate, inflation, and overall economic performance.
As the Nigerian economy continues to face challenges, including inflationary pressures and foreign exchange constraints, the CBN’s policies and interventions will play a crucial role in shaping the country’s economic trajectory.
The central bank’s ability to strike a balance between managing inflation and supporting economic growth will be critical in navigating these uncertain times.
Meanwhile, the financial regulator has been rolling out policies to reform the FX market since President Bola Tinubu was sworn in at the end of May 2023.
Some of the policies include the cessation of restrictions on deposits into domiciliary accounts, and unification of the multiple exchange rates systems which has led to the devaluation of the naira.
