© Reuters. FILE PHOTO: A person holds a new 1,000 Naira banknote as the Central Bank of Nigeria issues banknotes to the public through banks in Abuja, Nigeria, December 15, 2022. REUTERS/Afolabe Sotonde
by Chijioke Ohuocha
ABUJA (Reuters) – The Central Bank of Nigeria sold dollars at 645 naira in its latest auction, results showed on Friday, below 465 naira as the currency is traded on the official secondary market.
Nigeria operates multiple exchange rates, which the central bank has used to manage demand, mask pressure on the naira, and maintain its dwindling reserves. The system fueled the black market, trading sharply below the spot rate.
The bank held its last fortnightly auction on May 26. In April, he sold the dollar at a dollar auction at 630 naira.
The naira weakened faster in central bank auctions than in the spot market, leading many analysts to believe that devaluation could match the price traded at auctions.
The central bank on Thursday denounced news of the devaluation after the media reported a significant decline in the value of the naira following speculation on the outcome of a meeting held by new President Paula Tinubu with the central bank governor this week, as reported by the British newspaper The Guardian. Naira is already selling weaker at auctions.
Tinubu on Friday told the ruling Progressive Congress party governors in Abuja that the country’s multiple exchange rates will be simplified. “We will no longer have multiple exchange rates,” he said.
The central bank gradually adjusts the value of the naira in the spot market to avoid widespread devaluation. Former President Muhammadu Buhari, who had been in power for eight years, considered a strong currency a matter of national pride.