Informed sources told Bloomberg that they are discussing Nigeria’s decision to allow the local currency to trade more freely against the dollar.
According to Bloomberg data, the currency of Africa’s largest economy recorded the biggest decline in 7 years, depreciating 21 percent. Dollar/naira rate reached 600 level.
Negotiations are continuing on whether the Central Bank should allow more liberal foreign exchange trading, a senior bank official told Bloomberg. He stated that instructions regarding the authorized currency could be issued today or tomorrow at the latest.
Another senior Central Bank official noted that local banks have already been informed that the dollar/naira rate will be determined by the supply-demand balance instead of the Central Bank.
Experts said that a strong depreciation is expected in the official spot window, where the dollar/naira rate is traded at 472.18.
Nigeria’s currency has fallen to record lows since Friday after Central Bank Governor Godwin Emefiele was sacked by the country’s new president, Bola Tinubu.
Central Bank of Nigeria, Emefiele management underAt the time it allowed businesses and individuals to access the US dollar with little liquidity through few windows over strongly controlled currencies.
This has led many to the black market, where the dollar is traded more freely but is about 60 percent higher than the official interest rates.
Wale Edun, a lead member of Tinubu’s advisory board, told Bloomberg on Monday that currency consolidation is “imminent.”