The Central Bank of Nigeria has authorised commercial banks to freely trade foreign exchange at any rate.
The authorisation means that banks now have the power to sell forex at a market-determined rate.
It was gathered that some banks have pegged the USD to Naira rate at N699 to N750, suggesting that Nigeria is now operating a freely floating exchange rate in line with President Bola Ahmed Tinubu’s pledge to unify the rate.
Reacting to the development in an Arise Television interview on Wednesday, Dr. Andrew Nevin, the Advisory Partner & Chief Economist of PricewaterhouseCoopers (PwC), said the unification of foreign exchange rates will impact the country dramatically by boosting investment opportunities in Nigeria.
“What has been happening is that CBN is taking dollars from the Federation’s account and giving to privileged individuals at N411 to US dollar while the real price is N700 to N750 to the Dollar, we don’t really know because they’ve removed price transparency.
”What happens is that the state government cannot pay their pensioners. That fundamental issue will be addressed by the development. Now the state government will get full value for its dollar.
“It will have a dramatic impact on the fiscal structure of the country when we stop giving the dollar to privileged individuals. We get better investment, more fair use of the country’s resources and improved business environment, this will strengthen Nigeria’s currency”, he stated.
For years, Nigeria has maintained a tightly controlled official exchange rate as the country’s forex reserves hit new lows. While the CBN maintained an artificial rate of $1/N462.