Monday, March 4, 2024

CBN Denies Plans to Devalue Naira to N1.25, Affirms Commitment to FX Market Reforms

The Central Bank of Nigeria (CBN) has clarified that it does not intend to implement a new Naira policy aiming to devalue the FX dollar exchange rate to N1.25.

This statement comes as a response to an online report suggesting that the CBN was considering a new FX policy to manage inflation expectations, simplify conversion to major currencies, reverse currency substitution trends, and eliminate lower denomination notes.

The CBN, through its official communication channel (formerly known as Twitter), has labeled this information as false and urged the public to disregard it.

Since President Bola Tinubu assumed office in May 2023, the CBN has introduced several policies aimed at reforming the foreign exchange (FX) market.

These measures include the removal of restrictions on deposits into domiciliary accounts and the consolidation of multiple exchange rate systems, resulting in the devaluation of the Nigerian Naira.

Consequently, the exchange rate in the investors’ and exporters’ (I&E) window of the official market has risen from N461.50/$1 on June 13 to N742.10/$1 at the time of this report.

A member of the Monetary Policy Committee (MPC) and the Deputy Governor of the CBN, Aisha Ahmad, commented on the FX market reforms during a recent MPC meeting.

She emphasized that these reforms, which have led to exchange rate convergence, would enhance market transparency and attract more foreign capital inflows.

Despite some exchange rate volatility, Ahmad anticipates stability in the medium term as efforts to increase export proceeds intensify and demand for imported refined petroleum products decreases.

Ahmad emphasized the importance of exchange rate stability in boosting investor confidence and affecting domestic prices.

She highlighted the ongoing efforts to bolster foreign exchange supply as a sustainable approach to stabilize the foreign exchange market.”

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