Wale Edun, an influential member of President Bola Ahmed Tinubu’s advisory board, has stated that Nigeria will soon unify its exchange rates. Edun made this statement to Bloomberg following the surge in Nigeria’s dollar debt after the unexpected suspension of Godwin Emefiele, the Governor of the Central Bank of Nigeria (CBN), over the weekend.
Nigeria’s international bonds experienced the largest increase among emerging-market peers in Monday’s trading, which coincided with a public holiday in the country. The long-dated dollar debt reached its highest level since January, with the notes maturing in 2051 rising more than 3 cents on the dollar to a peak of 73.74, marking the biggest gain this year.
According to a JPMorgan index, the premium that investors demand to hold Nigerian debt over US Treasuries declined by 46 basis points to 710, representing the largest drop this year.
In a phone conversation with Bloomberg on Monday, Edun revealed that the unification of exchange rates in Nigeria is “imminent.”
It’s worth noting that on June 1, 2023, the CBN refuted a report suggesting that it had devalued the Naira to N631 against the dollar. The apex bank responded with a tweet containing a graphical image labeling the report as “fake news.” However, the CBN did resume the weekly bidding for foreign exchange, selling the spot rate to banks on behalf of their customers at N631 to a dollar.
The devaluation, as mentioned in the report, occurred within 24 hours after the dollar had traded at N461.6 at the Importers and Exporters (I&E) window, a piece of news that the CBN denied as false.
During President Tinubu’s inauguration at the Eagles Square in Abuja on May 29, he announced his government’s decision to unify the exchange rate in Nigeria.
Under the leadership of Emefiele, the CBN provided US dollars through various channels at tightly controlled rates with limited liquidity for businesses and individuals. This approach led many to resort to the black market, where the dollar traded more freely but at a premium of about 60% compared to the official rate.
