Nigeria Using Managed-Float Forex Regime, Central Bank Says

LAGOS (Capital Markets in Africa) — Nigeria has not changed its foreign exchange policies from a managed float to a flexible regime, Central Bank Governor Godwin Emefiele said Tuesday.

A report concluding that the country has adopted a flexible foreign-exchange rate based on comments by Finance Minister Zainab Ahmed is wrong, according to the Governor.

Africa’s largest crude producer now uses the more flexible Nafex rate for all official transactions, abandoning the 379 naira to the dollar fixed rate the central bank still has on its website, Ahmed said Tuesday. Nigeria’s 2021 budget was prepared based on the central bank’s fixed rate.

“The country is deemed not to be practicing a multiple currency regime as long as rates vary or range around a band that is not more than 2% below the nominal market rate,” Emefiele said. “In our case, the nominal market rate is Nafex. If the minister says that the rate for monetization is anchored or benchmarked on Nafex, the minister has not talked about a flexible exchange rate.”

The Abuja-based regulator said it ceased interventions in the investors and exporters window since January, though it continues to monitor the market to determine whether or not to intervene. It is also working with the government and the finance ministry to achieve a stable foreign-exchange regime, Emefiele said.

Payments to states in the country will be based on the Nafex rate, Vice President Yemi Osinbajo said at a Chatham House forum in London on Tuesday. “We have been at a managed exchange rate regime. We are moving closer and closer to unifying the exchange rate,” Osinbajo said.