CBN Yet To Adopt Flexible Exchange Rate System-Emefiele
The Central Bank of Nigeria has denied moving into a flexible exchange rate regime and has not devalued the official rate of the naira.
Godwin Emefiele, the apex bank governor disclosed the bank’s position on Tuesday during the 278th meeting of the Monetary Policy Committee in Abuja.
Bloomberg had on Monday quoted the Minister of Finance, Budget and National Planning, Zainab Ahmed, as saying the CBN had adopted the Nigerian Autonomous Foreign Exchange rate as the new official rate for government transactions.
“Within the government and the central bank, there is only one official rate and that’s the NAFEX rate,” Bloomberg quoted Ahmed.
NAFEX is the FMDQ Exchange benchmark rate for foreign exchange spot operations in the Investors’ & Exporters’ forex window which currently trades at N410.13 per dollar.
A switch by the government would mean devaluing the naira from the official rate of N379 to the dollar to the N410.13 traded on the Investors’ and Importer Windows.
Emefiele said, “Nigeria has not changed from its foreign exchange management policies. Nigeria still remains on a managed float.
“What does the managed float regime mean mean? That the Central Bank being the institution that has the core mandate for foreign exchange management in the country, would run the market, see to how the market operates, depending on its reading on how exchange rate moves in the market, will come from time to time to intervene in the foreign exchange market.”
Emefiele said so far, the bank has not intervened in the foreign exchange window made for investor’s and exporters.
In Q3 last year, the CBN intervened in the I&E exchange window with $434.6m.
He said, “It might interest us to know that since January, the CBN has not intervened in the I&E Window. The market has always operated within a band of around N409, in fact at some points it went to N410, went to N413 and began to move and that is the way it is supposed to move.
“And then Central Bank’s job is to watch the market and see how it is operating and from therebdecide whether or not it should intervene and moderate the rate in the market in line with our own reading of were the exchange rate should be.”