The Nigerian Naira fell to a new low on the black market as it fell to N395 to the dollar on Monday.
This comes on the heels of an announcement by the Central Bank of Nigeria (CBN), that it had adjusted the exchange rate for the first time in four years.
The Naira has been on a high of N370 for several weeks as the demand for dollars increased exponentially in the last few weeks opening up the black market.
According to a report by the financial watch, this was also bolstered by a CBN directive to Bureau De Change operators in the country not to sell the US dollar above N380.
Other sources corroborated the new black marker prices as experts say this is a subtle way of devaluating the Nigerian Naira by 15% as the official exchange rate jumped from N307 to N360.
According to a report by Bloomberg, the effects of the coronavirus pandemic on the global market pushed Nigeria to not only devalue the Naira, the apex bank also altered the rate for foreign portfolio investors from N366 to N380.
“Please be advised that the applicable exchange rate for the disbursements of proceeds of IMTOs for the period Monday, March 23 to Friday, March 27, 2020 is as follows – IMTSOs to banks: N376/$1; banks to CBN: N377/$1; CBN to BDCs: N378/$1; BDCs to end users: not more than N380. Volume of sale to each market is $20,000 per BDC.
“Kindly note that the GBP rate should be derived from USD cross rate on the date of the sale.”
CBN wrote to BDC operators on Monday.
Despite the negative speculations however, the apex bank said it has enough foreign currency in its reserves to meet legitimate FX demands.
It said further that it was working towards proper assessment of the impact of the Covid-19 pandemic in order to develop an appropriate fiscal response.
A statement released by CBN to debunk the speculations read:
“The CBN wishes to note with displeasure, the rumours and speculative activities of unscrupulous players in the foreign exchange market, borne out of the impression that the CBN is on the verge of devaluing the naira and triggering panic in the FX market”
These rumours are false, unwarranted and calculated to serve their dubious and selfish ends. We, therefore, wish to state as follows: We have begun a robust and coordinated investigation, in collaboration with the Nigerian Financial Intelligence Unit (NFIU) and related agencies to uncover the unscrupulous persons and FX dealers who are creating this panic.
“For nearly four years, the CBN has successfully maintained relative stability in all segments of the foreign exchange market, which has enabled investors, households and other economic agents to plan and to conduct their genuine foreign exchange transactions with relative ease.
“The introduction of several foreign exchange management measures side-by-side with complementary interventions in food production and manufacturing has drastically reduced food importation, which hitherto constituted a large chunk of the pressure on the foreign exchange market;
“Although the outbreak of the Coronavirus led to global economic slowdown, fall in the price of crude oil and less inflow of dollars into Nigeria, the associated public health concerns have also led to factory closures in China, substantial drop in imports, widespread travel restrictions around the world and cancellation of many conferences, sporting events, business travels, and FX orders.
“Consequently, the CBN will invoke the full weight of applicable sanctions on any persons and authorised dealers found to be involved in such disruptive and speculative market behavior.”