Nigeria Central Bank denies devaluing Naira as calls grow louder

Nigeria’s central bank dismissed a report that it had devalued the naira as traders raised bets for it to weaken by almost a third, days after President Bola Tinubu said his administration will seek to end the nation’s multiple-currency regime

The Central Bank of Nigeria said a media report claiming it had devalued the naira by 26% to 630 per dollar was inaccurate. The exchange rate is 465 naira per dollar and “has been stable around that rate for a while,” it said on Twitter.

Tinubu announced plans to adopt a uniform exchange rate in his inauguration speech on May 29. Nigeria has numerous exchange rates, dominated by a tightly controlled official rate, that cuts off access to many businesses and individuals, which in turn drives demand to the unauthorized black market. The spread between the managed and parallel markets is almost 60%. Tinubu’s proposal may help attract investors who had shunned Africa’s biggest economy.

Non-deliverable forward contracts on the naira are pricing in a depreciation of about 21% over the next three months and those with a 12-month tenor 32%.

The moves reflect speculation by some market participants that authorities will allow for a steep decline in the naira.

Lagos-based brokerage, Chapel Hill Denham said that the naira should be weakened above its fair value of 606.58 naira to the dollar. It should be devalued close to the 650 naira to 700 naira range to the dollar it trades at in the parallel market “to restore investor confidence,” analyst Tajudeen Ibrahim said in an emailed note on Wednesday.