The adjustments followed the statement issued by the Central Bank of Nigeria, CBN titled Operational Changes to the Foreign Exchange Market.
The statement signalled the commencement of a unified exchange rate which would now replace the multiple rates used over the years. This development comes amid President Tinubu’s policy instructions since assuming office on May 29 2023.
As a follow-up to the President’s instruction, the CBN according to sources knowledgeable about the issue, directed Deposit Money Banks (DMOs) to eliminate the rate cap on the naira at the Investor’s and Exporters’ (I&E) Window of the foreign exchange market.
The aim was to allow for a free float of the national currency against the dollar and other global currencies, a development which has been fiercely rejected by experts.
By unifying the foreign exchange rates, traders who deal in foreign currency in the official FX market can determine rates they find comfort in the FX market.
Before now, only the CBN had the authority to dictate FX rates. The unification, though a great development for the FX market, has attracted some negative consequences like the depreciation of the naira/dollar exchange rate to ₦662/$1.
With the new ₦662/$1 exchange rate, the public debt automatically will experience a sharp increment as it was before now, quoted at ₦448.50/$1 by the Debt Management Office (DMO) as the official exchange rate.
At a quote of ₦662/$1, it means the total public debt will rise by 12.3% from an estimated ₦79 trillion to ₦82 trillion.
According to an analysis by Nairametrics, the change in public debt figures will not affect the statutory debt amount which is $41.6 billion as the repayment will still be done in foreign currency.