March 20, 2020
by Chijioke Ohuocha of Reuters, Edited by Edmund Blair and Giles Elgood
The Nigerian central bank has sold the U.S. dollar to local Jaiz Bank at 360 naira on the official currency market, weaker than the 306 where it was previously pegged, implying a 15% devaluation, traders said on Friday.
Traders said no quotes were shown on Friday for the naira on the official market, which has been supported by the central bank for more than two years.
The move comes after the impact of an oil price plunge spread across asset classes in Nigeria, causing investors to widen spreads on the bond market, sell stocks and weaken the country’s dollar reserves.
Last week JP Morgan said it expected Nigeria to devalue its currency by around 10% to 400 naira per dollar by the end of June after a sharp oil price tumble ramped up the pressure on Africa’s biggest economy.
On the over-the-counter spot market for investors few trades were done on Friday on the naira at 380 on thin liquidity, traders said. Nigeria operates a multiple exchange rate regime which it has used to manage pressure on the currency.
The central bank was not available for comment.
The post Nigerian Central Bank Sells U.S. Dollar at Weaker Rate Than Previous Peg first appeared in Reuters on March 20, 2020