{"id":8244,"date":"2021-06-14T18:54:30","date_gmt":"2021-06-14T18:54:30","guid":{"rendered":"https:\/\/www.buyucoin.com\/crypto-labs\/after-central-bank-devalues-naira-by-5-finance-minister-attributes-drop-to-market-forces\/"},"modified":"2021-06-14T18:54:30","modified_gmt":"2021-06-14T18:54:30","slug":"after-central-bank-devalues-naira-by-5-finance-minister-attributes-drop-to-market-forces","status":"publish","type":"post","link":"https:\/\/www.buyucoin.com\/crypto-labs\/after-central-bank-devalues-naira-by-5-finance-minister-attributes-drop-to-market-forces\/","title":{"rendered":"After Central Bank Devalues Naira by 5% Finance Minister Attributes Drop to \u2018Market Forces\u2019"},"content":{"rendered":"

Nigerian Finance Minister Zainab Ahmed has denied widespread reports that the Central Bank of Nigeria (CBN) had sanctioned the devaluation of the local currency sometime in May 2021. Instead, she attributes the naira\u2019s fall to the \u201cvolatility in the oil price.\u201d Ahmed\u2019s remarks come just a few weeks after the official naira exchange rate dropped from $381 to the dollar to the current rate of 411:USD1. <\/strong><\/p>\n

Devaluation vs Depreciation<\/h2>\n

As previously reported<\/a> by Bitcoin.com News, the CBN had initially allowed the naira\u2019s exchange rate to drop to 419.5 per U.S. dollar. However, since May 14, 2021, the naira\u2019s exchange rate against the dollar has remained at or just below 411. It is this apparent adjustment of the exchange rate by the CBN (which meets Investopedia\u2019s definition of devaluation<\/a>) that prompted reports that the naira has been devalued.<\/p>\n

However, in her explanation<\/a>, Finance Minister Zainab Ahmed still refuses to equate the CBN\u2019s tinkering with the exchange rate to devaluation. She said:<\/p>\n

Let me not use the word devaluation. (The) naira is responding to market forces of demand and supply. We have oil and gas, unfortunately, still the major source of foreign exchange.<\/p>\n

According to a report, oil contributes less than 15% to Nigeria\u2019s Gross Domestic Product (GDP) yet it brings in \u201cat least 70-85 per cent of revenue and 80-90 per cent of foreign exchange in Africa\u2019s biggest oil producer.\u201d In order to remedy this, Ahmed says Nigeria is now focused on finding and developing alternative sources of foreign exchange.<\/p>\n

<\/p>\n

Unifying the Naira\u2019s Multiple Exchange Rates<\/h2>\n

In the meantime, as the CBN and Nigerian government attempt to unify the naira\u2019s multiple exchange rates, the currency continues to weaken on the parallel market. For instance, at the time of writing, naira\u2019s sell rate had depreciated<\/a> to 502 against the dollar from the 493 that had been reported in late May. Before the devaluation, the naira\u2019s black market rate had stabilized around 485.<\/p>\n

However, following the CBN\u2019s exchange rate adjustment, the gap between the official and parallel market exchange rates has grown. This growth, in turn, raises fresh doubts about the central bank\u2019s ability to unify the naira\u2019s multiple exchange rates.<\/p>\n

Do you think it\u2019s possible for the CBN to unify the naira\u2019s official and parallel market exchange rates? Tell us what you think in the comments section below.<\/strong><\/em><\/p>\n

Bitcoin News
\nEconomics, Central Bank of Nigeria, demand and supply, Foreign exchange, forex black market, multiple exchange rates, naira devaluation, oil prices, Zainab Ahmed<\/p>\n","protected":false},"excerpt":{"rendered":"

Nigerian Finance Minister Zainab Ahmed has denied widespread reports that the Central Bank of Nigeria (CBN) had sanctioned the devaluation of the local currency sometime in May 2021. Instead, she attributes the naira\u2019s fall to the \u201cvolatility in the oil price.\u201d Ahmed\u2019s remarks come just a few weeks after the official naira exchange rate dropped…<\/p>\n","protected":false},"author":0,"featured_media":8245,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[53,3],"tags":[],"class_list":["post-8244","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blockchain-news","category-coin-news"],"_links":{"self":[{"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/posts\/8244"}],"collection":[{"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/comments?post=8244"}],"version-history":[{"count":0,"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/posts\/8244\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/media\/8245"}],"wp:attachment":[{"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/media?parent=8244"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/categories?post=8244"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buyucoin.com\/crypto-labs\/wp-json\/wp\/v2\/tags?post=8244"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}