According to the auction results on Friday, the Nigerian central bank sold dollars at a cost of 645 naira, which is lower than the official secondary market pricing of 465 naira.
Nigeria’s central bank employs a variety of exchange rates to manage demand, mask the impact of external pressure on the naira, and maintain the country’s dwindling foreign currency reserves. The arrangement has fueled a parallel market with prices significantly below the spot rate.
The bank held its most recent biweekly auction on May 26. In April, the dollar was auctioned off for 630 naira.
Many analysts believe that the naira would be devalued to the same amount as it is sold in central bank auctions, which are far lower than the spot market rate.
The media reported a significant drop in the value of the naira this week due to speculation about the outcome of a meeting between new President Bola Tinubu and the governor of the central bank, and the naira is already sold weaker at auctions, so the central bank denounced news of currency devaluation on Thursday.
Tinubu told governors from his All Progressives Congress party in Abuja on Friday that Nigeria’s many currency rates will be harmonized. “We will no longer have multiple exchange rates,” he stated.
To avoid a catastrophic devaluation, the central bank has been progressively altering the naira’s spot market value. Former President Muhammadu Buhari, who was in power for eight years, valued a stable currency.
