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CBN Unifies FX Rates, Devalues Naira…. Now N380 To One Dollar

Allocations to the three tiers of government in naira will increase as the federation account allocation committee (FAAC) has adopted a new exchange rate rate of N360/$, TheCable can report.

This is as a result of the unification of exchange rates by the Central Bank of Nigeria (CBN).

FAAC meeting ended in a deadlock on Wednesday.

The committee, which disburses revenue to the three tiers of government, had normally used the CBN rate of N307/$.

But with dwindling oil revenue, which constitutes about 60 per cent of the disbursements, the rise in exchange rate will boost the federation allocations.

The CBN rate of N307/$ is now history, while concessionary rates such as N325 and N330 have also been abolished.

All international oil companies will now sell their FX incomes to CBN at N360/$ as against the N325/$ they used to sell to the Nigerian National Petroleum Corporation (NNPC).

The bank had earlier said market fundamentals do not support devaluation of the naira.

This was to calm the market after panic in the BDC segment made the naira exchange at N410/$.

It said this in response to a panic in the market after crude oil prices dropped to $30 on the back of a price war between Saudi Arabia and Russia.

The country has operated different exchange rate since the 2016 recession with the official rate set at N307/$ and Bureau de Change rate at N360/$.

It was also gathered that the slash in the price of petrol could not go lower as speculated because of the anticipated change in exchange rate.

The federal government had slashed the pump price of petrol from N145 per litre to N125 to reflect a drop in crude oil prices.

There has been no official statement from the Central Bank of Nigeria on the development.

This is the highest since the window was created in 2017 to ensure forex availability to businesses.

The OMO auction conducted by the CBN on Thursday did not record any sales as investors adopted a wait-and-see approach on the back of reduced oil prices and the coronavirus outbreak.

“Dear all, kindly be informed that the CBN has moved the rate of FX sales to FPIs from N366.70 to N380.20/$. We will advise as developments unfold,” a notice on the Bloomberg terminal read on Friday.

The CBN has summoned an emergency bankers committee meeting for Saturday and the monetary policy committee meeting is scheduled to hold on Monday and Tuesday.

About Editor

Otunba Sayo Akintola is a 1992 graduate of Linguistics from the University of Ibadan, Oyo State. He holds a post-graduate diploma in Financial Management and MBA from Abubakar Tafawa Balewa University, Bauchi. He started his 12-year sojourn in journalism at the Nigerian Tribune in 1993 as Business and Economy reporter. He rose through the ranks to become the Group Business Editor of the nation’s oldest surviving private national newspaper, the Nigerian Tribune. He set up World Street Journal magazine in 2018.

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