The Central Bank of Nigeria (CBN) adjusted the official exchange rate to N380/$1 representing 5 percent level, in a major move to unify the multiple exchange rates.
Although no official announcement was made by the apex bank, its website displayed the buying rate of N379/$1 and selling rate of N380/$1.
Calls recently mounted for CBN to close the gap between the official CBN rate and the more market-friendly Nigerian Autonomous Foreign Exchange Rate (NAFEX). The NAFEX traded between N385-390 in recent weeks.
A major issue the move has solved is the condition precedent towards obtaining a $3 billion World Bank loan. The government applied for that as part of its N2.3 trillion stimulus expected to be injected into the economy. A unification of the exchange rate is critical to the disbursement of the loan, it was learnt.
Analysts have also said the new move will increase the amount available to share from the Federal Allocation (FAAC) between the FG and States.
The CBN’s latest move also suggests more money for the government as the oil proceeds conversion rate is now N379/$1 as against N360/$1 previously.
Analysts also said Government taxes that are priced in forex but converted to naira also stand to gain a major earnings boost such as Custom duties, petroleum profit taxes.
“However, the government will record cost escalations for some of its capital projects and expenditure. From vehicle purchases to furniture and fittings. With the exchange rate devalued again, fuel prices might increase if the impact of the exchange rate is reflected in the pricing template” the analyst noted.
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