CBN Insists Naira Not Devalued, Only Readjusted
By Modupe Gbadeyanka
On Friday, the Central Bank of Nigeria (CBN) changed the exchange rate of the Naira to the Dollar at its official window from N307/$1 to N360/$1, signalling a devaluation after an initial denial.
The interbank exchange rate is the rate the apex bank sells foreign exchange to federal government and its agencies as well as some companies. The rate is different from the market rates.
But the CBN Governor, Mr Godwin Emefiele, has said the local currency was not devalued, emphasising that the exchange rate was only readjusted to reflect the current global realities.
Mr Emefiele made this clarification on Saturday when the apex bank had a crucial meeting with chief executives of banks operating in the country to discuss effect of the global coronavirus pandemic on the nation’s economy.
He said the central bank merely carried out an adjustment of price and not a devaluation of the currency as it’s being reported in the media.
Announcing outcome of yesterday’s meeting, the central bank said, “CBN Governor, Godwin Emefiele, clarifies supposed devaluation of Naira. Says it is an adjustment of price and not a devaluation of the currency.”
Also, on Friday, the central bank devalued the exchange rate of the local currency to the American currency to N380/$1 from the previous rate, N360/$1.
However, before this action, the rate had depreciated to N375/$1 as a result of initial speculations that the Naira was going to be devalued, of which the CBN said it was not going to do.
The crash in the price of crude oil to nearly $20 per barrel at the international market raised such fears because Nigeria depends mainly on oil for its external earnings.
Business Post reports that the devaluation of a currency is the reduction or readjustment in the official value of a currency in relation to other currencies. It is an action usually taken during a financial crisis.