In an effort to stabilize the Nigerian exchange rate and strengthen the economy, the Central Bank of Nigeria (CBN) has confirmed its commitment to unify the official exchange rate around its NAFEX rate.
Dr. Godwin Emefiele, the CBN Governor, while speaking at a recent virtual Investors’ Conference with the Federal Government which was organized by CitiBank, disclosed that the NAFEX rate which is the forex window for investors and exporters to trade dollars on market-determined prices, will be unified with the official market and the parallel market rates to form a single exchange rate. According to Emefiele, “We will continue to pursue unification around the NAFEX Market”.
The CBN Governor declared the parallel market illegal, asserting that “The CBN has always maintained that the black market is not a good determinant of the value of the naira. You’ll find that people who are in a hurry and do not want to procure the kind of documentation required, will sometimes rush to those markets. But we have used the period of this pandemic to prove that anybody dealing in that market is dealing in an illegal business.”
The Federal Government’s plan to unify the exchange rate is expected to instill confidence in potential investors, improve stability, as well as encourage transparency in the nation’s foreign exchange market. It will also eliminate multiple exchange rates, and work in tandem with the IMF’s previous demand for Nigeria to fast track the unification of its exchange rate, a move that experts believe will have positive impacts on the Nigerian economy and help attract foreign direct investment.