The central bank has devalued the currency three times since March 2020, but the naira has continued to weaken. In June, Central Bank Governor Godwin Emefiele, said Nigeria's spot naira rate was overvalued by up to 10%, citing the bank's real effective exchange rate model.

Has naira been devalued?

The official rate of the naira was devalued from N305 to the dollar, to N380 to the dollar. This was in the third quarter of 2020.

Why do CBN devalue naira?

It was the need to adjust for the decrease in supply of foreign exchange that prompted the CBN to devalue the naira.

Why is the naira so weak?

Nigeria has seen two major recessions in five years. The 2015-2017 recession was triggered by the fall in global oil prices, while that of 2019—2020 was attributable to the novel coronavirus crisis. Recession undermines public finances while dampening overall business confidence and further crippling the naira.

What is naira devaluation?

Devaluation is an official reduction of the value of a domestic currency in relation to the value of foreign currency, particularly those currencies accepted internationally for transactions. ...

CBN Has No Plan To Devalue Naira 31/10/15

18 related questions found

Which year did Nigeria stop using coins?

On 1st July, 1959 the Central Bank of Nigeria (CBN) issued Nigerian currency banknotes, while the WACB-issued banknotes and coins were withdrawn. It was not until 1st July, 1962 that the currency was changed to reflect the country's republican status.

What is meant by devaluation?

Devaluation is the deliberate downward adjustment of the value of a country's money relative to another currency, group of currencies, or currency standard. ... It is often confused with depreciation and is the opposite of revaluation, which refers to the readjustment of a currency's exchange rate.

How can naira regain its value?

Expanding exports

Our number way of increasing the value of Naira is to expand exports. At the moment, Nigeria gains most of its FX from the sale of oil. ... This way, revenue generated from export will increase the inflows of FX instead of relying solely on the export of oil.

What is Nafex Nigeria?

NAFEX is the FMDQ benchmark rate for Foreign Exchange (“FX”) spot operations in the Investors' & Exporters' FX Window (hereinafter referred to as the “Window”). NAFEX is designed and generated independently and objectively and also published every business day at a specific time.

How does a government fix its exchange rate?

Typically, a government wanting to maintain a fixed exchange rate does so by either buying or selling its own currency on the open market. This is one reason governments maintain reserves of foreign currencies.

Is USD used in Nigeria?

The bottom line is the only currency that's good in Nigeria, that everyone wants is Naira or USD dollars. If you take pounds you will still need to convert.

What is the meaning of FMDQ?

FMDQ stands for Financial Markets Dealers Quotations.

What is the meaning of Nafex rate?

NAFEX is the FMDQ reference rate for foreign exchange (“FX”) activities in the Investors' & Exporters' FX Window and is designed to represent Spot FX market rates in the Window. NAFEX rates will be generated independently and objectively and published every business day at 12 noon or at a time advised by FMDQ.”

What is I & E window?

The I&E FX window is the market trading segment for investors, exporters and end-users that allows for FX trades to be made at exchange rates determined based on prevailing market circumstances.

How can the value of currency increase?

How to increase the value of a currency

1. Sell foreign exchange assets, purchase own currency.
2. Raise interest rates (attract hot money flows.
3. Reduce inflation (make exports more competitive.
4. Supply-side policies to increase long-term competitiveness.

Is devaluation good or bad?

Devaluation tends to improve a country's balance of trade (exports minus imports) by improving the competitiveness of domestic goods in foreign markets while making foreign goods less competitive in the domestic market by becoming more expensive.

Who benefits devalued currency?

The main advantage of devaluation is to make the exports of a country or currency area more competitive, as they become cheaper to purchase as a result. This can increase external demand and reduce the trade deficit. Conversely, devaluation makes imported products more expensive and stimulates inflation.

What should I invest in if dollar collapses?

Mutual funds holding foreign stocks and bonds would increase in value if the dollar collapsed. Additionally, asset prices rise when the dollar drops in value. This means any commodities-based funds you own that contain gold, oil futures or real estate assets would rise in value if the dollar collapsed.

Which country Print Nigeria money?

Naira notes and coins are printed / minted by the Nigeria Security Printing and Minting (NSPM) Plc and sometimes, other overseas companies, and issued by the CBN.

Who changed Nigeria currency to naira?

In mid-2009 when Sanusi Lamido Sanusi took over as CBN Governor, The Central Bank of Nigeria changed the 5, 10 and 50 naira to polymer notes.

What is OTC FX futures?

OTC FX Futures means Naira-settled non-deliverable forward contracts where parties agree to an exchange rate for a predetermined date in the future, without the obligation to deliver the underlying currencies (US Dollar and Nigerian Naira) on the maturity/settlement date.

When was FMDQ established?

FMDQ Private Markets, incorporated in February 2020, is an organised hub where private companies, including large corporates and small- and medium- sized enterprises, can raise debt and equity capital in the Nigerian capital markets.