Naira depreciates to N664.04/$ as CBN lifts restrictions.

THE Naira yesterday lost almost half of its value in the official market as the exchange rate in the Investors and Exporters, I&E window rose to N664.04 per dollar from N471.67 per dollar on Tuesday, as the Central Bank of Nigeria, CBN announced measures to liberalise the market including the elimination of multiple exchange rates, and freedom for banks to buy and sell foreign exchange at any rate based on a willing buyer and willing seller arrangement.
Announcing the new measures in a statement titled, “Operational Changes to the Foreign Exchange Market”, Director, Financial Markets, Dr. Angela Sere-Ejembi, said: “The Central Bank of Nigeria (CBN) wishes to inform all authorized dealers and the general public of the following immediate changes to operations in the Nigerian Foreign Exchange (FX) Market:
Data from the FMDQ showed that the I&E window exchange rate closed yesterday at N664.04 per dollar, up from N471.67 per dollar on Tuesday.
On the contrary, the naira appreciated by N13 in the parallel market as the exchange rate in the market dropped to N755 per dollar, from N768 per dollar on Tuesday.
It’ll eliminate multiple exchange rates —Analysts
Analysts, who spoke to Vanguard, said that means that the CBN has floated the naira, and the exchange rate will now be market determined based on the demand and supply situation.
This development, analysts added, will lead to the elimination of multiple exchange rates, arbitrage, round tripping and other malpractice as well as enhance foreign exchange inflow into the country, and improve government revenue by about N4 trillion.
They, however, pointed out that the development will lead to a further rise in the prices of goods and services, increase government debt by about N12 trillion to N90 trillion, while increasing the cost of servicing the nation’s debt, and also elevate the debt to GDP ratio.
SOURCE: VANGUARD NEWSPAPER