CBN to eliminate official/ black market dollar exchange rate margin

The Central Bank of Nigeria [CBN] will try to eliminate the margin between the official and black market exchange rate against the dollar.

The disclosure was made by the Minister of Finance, Mrs. Kemi Adeosun on Tuesday.

The naira is currently trading on the parallel market some 40 percent lower than the official rate.

The margin is owing to low global crude prices that have dried up vital oil revenues and pushed Africa’s largest economy into recession.

CBN had scrapped a 16-month-old peg of 197 naira to the dollar in June, but it continues to trade in the official market.

Consequently, the naira remains far stronger against the dollar there than on the parallel market. 

The government has blamed that black market for damaging the already shaky economy.

“The CBN is working on the elimination of arbitrage,” Finance Minister Kemi Adeosun told Reuters by text message.

Mrs. Adeosun, however, did not say how she plans to achieve the feat.

Earlier, she had told a conference that the Central Bank was working on removing the price difference. 

Adeosun said this had been in response to a question about manufacturers not getting incentives to produce given an arbitrage opportunity.

A CBN spokesman, Isaac Okorafor, said the central bank was working towards “ensuring that the forex market operates as effectively as we would envisage”.

He said the aim was to “ensure there is no black market” but did not give details of how this would be achieved.

The naira has traded around 305.5 naira to the dollar on the official interbank market since August, while it was quoted at 487 to the dollar on the parallel market on Monday. 

The central bank (CBN) “has been directed to do this and CBN has promised to do something by putting a system in place to eliminate the black market because it’s damaging the economy,” Kemi Adeosun told a conference. 

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