CBN Devalues Naira By 5.3% At Currency Auction

Nigeria’s central bank devalued the naira at one of its currency auctions, according to people familiar with the matter, Bloomberg reports.

The weakening comes after Governor Godwin Emefiele announced last month that the bank plans to unify its multiple exchange rates to improve the transparency of its currency-management system.

At an auction for importers on Friday, the central bank asked that bids for foreign exchange be made at 380 naira per dollar, compared with 360 previously, the people said, asking not to be identified because they’re not authorized to speak to the media.

Isaac Okorafor, a spokesman for the central bank, didn’t answer calls to his mobile phone or reply to messages seeking comment.

The bank previously devalued the currency in March, when it adjusted the official peg against the dollar to 360 from 307. There’s another rate for investors and exporters known as the nafex window, which acts as a spot-rate for the naira.

The nafex which has been relatively stable around 388 per dollar since mid-May following a recovery in oil prices — was introduced in 2017 as a way of wooing back foreign investors spooked by an economic crisis, without formally devaluing the currency.

The naira also trades widely in the black market, which Emefiele has said is illegal, and is sold by the regulator to companies and individuals at varying rates.

Investors and the International Monetary Fund have long called for Nigeria to merge its multiple exchange rates, saying the absence of a single rate creates confusion and deters foreign investment.