Nigeria Mulls Single Exchange Rates Regime

Nigeria is considering a unified exchange rate regime to generate more local currency from its dollar inflows and manage the rate in a sustainable manner.

A document from the Ministry of Finance, Budget, and National Planning on Abuja, signed by the Minister of Finance, Mrs Zainab Ahmed, was cited by Reuters as the source of this on Wednesday.

It was also disclosed that the Minister explained that the government would direct oil firms to sell dollars to the Central Bank of Nigeria (CBN) as opposed to the state-owned corporation Nigerian National Petroleum Corporation (NNPC).

She also added that the government would deregulate petroleum prices as part of measures to safeguard oil revenues.

The policy will be implemented over a 12 month period, the document said.

Nigeria currently operates a multiple exchange rate regime across different segments for investors, exporters, and other needs which the CBN has used to control and manage pressure on the local currency.

However, due to the recent COVID-19 pandemic, the oil dependent Nigerian economy faced dollar shortages which accounts for its most of its foreign reserves led to cut down on spending and has brought about a plunge to the naira.