© Reuters. FILE PHOTO: A person holds a new 1000 Naira note as the Central Bank of Nigeria releases the notes to the public through the banks in Abuja, Nigeria, December 15, 2022. REUTERS/Afolabi Sotunde
By Chijioke Ohuocha
ABUJA (Reuters) – Nigeria’s central bank has sold the dollar at 645 naira at its latest auction, results showed on Friday, lower than 465 naira where the currency is trading 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 conserve its dwindling reserves. The system has fueled a black market, trading sharply lower than the spot rate.
The bank held the latest bi-weekly auction on May 26. In April, it auctioned dollars at 630 naira.
The naira has weakened faster at the central bank’s auctions than on the spot market, leading many analysts to believe that a devaluation could match the rate traded at the auctions.
On Thursday, the central bank denounced news of a devaluation of the currency after media reported a big fall in the value of the naira following speculation over the outcome of a meeting new President Bola Tinubu had with the central bank governor this week, and as the naira is already sold weaker at auctions.
Tinubu on Friday told governors from his ruling All Progressives Congress party in Abuja that the country’s multiple exchange rates will be streamlined. “We will not have multiple exchange rates anymore,” he said.
The central bank has been adjusting the value of the naira gradually on the spot market to avoid a large-scale devaluation. Former President Muhammadu Buhari, who was in power for eight years, viewed a strong currency as a matter of national pride.