Naira: CBN says more action coming in “weeks”

The Central Bank of Nigeria (CBN) plans to announce further measures to loosen foreign exchange controls “in the next couple of weeks,” Deputy Governor Kingsley Obiora said.

Still, the bank will step in to stabilize the market if necessary, Mr Obiora hinted, saying the current float of the currency remained “managed” and not “totally free”.

“There is no country in the world, even the US, that has a completely free float,” he was quoted by Bloomberg as saying.

– Why it matters

He spoke as the naira closed weaker on the official market than the black market on Monday, the first time since the CBN removed restrictions and allowed banks and traders to freely determine the price of the currency.

The naira weakened 16% to 770.38 to the dollar at the close of trade on Monday, according to the website of the FMDQ Exchange where the currency is traded.

At the unauthorized parallel market, it ranged between 750 and 763.

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Mr Obiora said it may be too early to determine if the naira’s exchange rate to the dollar has “bottomed out” and pointed to analysis done by the International Monetary Fund suggesting that the naira should not be as weak as the parallel market indicated.

He said the supply of foreign exchange will eventually be unlocked once the price of the dollar reaches a level that both buyers and sellers consider “fair.” “We are allowing the market itself to set a price,” he said.

With the exchange rate reforms and fuel subsidy removal by the President Bola Tinubu administration, the CBN deputy governor said he expects the economy to grow at a faster pace.

“I completely expect us to do 5% to 6% growth next year,” he said. “Over the next four years, you may see the GDP approach something like $600 billion to $700 billion.”