The Central Bank of Nigeria (CBN) maintains that there would be a convergence of exchange rates despite the depreciation seen in the black market.
The CBN Director of Monetary Policy, Hassan Mahmud, stated this during a virtual investor conference on Tuesday.
He said: “The spot rate is the reference rate and I expected convergence of Nigeria’s several exchange rates, a gap which has frustrated investors.”
Mahmud said the apex bank was worried about the supply side of FX and the confidence in the system while adding that the level of the naira is expected to adjust based on demand.
According to him, market failures had made the CBN adopt a managed float regime.
This statement was coming after the naira hit a low of N532/$1 on the unofficial or black market on Monday, with dollars hard to come by following the CBN’s recent actions to channel demand from the unofficial market, where the naira is trading at much lower levels.
The trend of the Naira has been bearish and with the increase in demand for imported products, most analysts believe that rates would depreciate even further.