After Central Bank Devalues Naira by 5% Finance Minister Attributes Drop to ‘Market Forces’ – Economics Bitcoin News

Bitcoin.com

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’s fall to the “volatility in the oil price.” Ahmed’s 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.

Devaluation vs Depreciation

As previously reported by Bitcoin.com News, the CBN had initially allowed the naira’s exchange rate to drop to 419.5 per U.S. dollar. However, since May 14, 2021, the naira’s 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’s definition of devaluation) that prompted reports that the naira has been devalued.

How To Get Free Crypto  

However, in her explanation, Finance Minister Zainab Ahmed still refuses to equate the CBN’s tinkering with the exchange rate to devaluation. She said:

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.

According to a report, oil contributes less than 15% to Nigeria’s Gross Domestic Product (GDP) yet it brings in “at least 70-85 per cent of revenue and 80-90 per cent of foreign exchange in Africa’s biggest oil producer.” In order to remedy this, Ahmed says Nigeria is now focused on finding and developing alternative sources of foreign exchange.

Unifying the Naira’s Multiple Exchange Rates

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

However, following the CBN’s 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’s ability to unify the naira’s multiple exchange rates.

Coinbase Banner  

Do you think it’s possible for the CBN to unify the naira’s official and parallel market exchange rates? Tell us what you think in the comments section below.

Tags in this story

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Read disclaimer

Go to Source
Author: Terence Zimwara


Recommended Crypto Services, Products and Strategies:

The first thing any crypto investor needs is is a reliable and secure Crypto Wallet.  Whether you’re looking for an online wallet, hardware wallet, desktop or mobile wallet, Crypto Renegade provides you with all the Best Crypto Wallets in each category.

Best Crypto Wallets Banner

When you’re ready to buy more crypto, or exchange your coins for others, Crypto Renegade’s list of the Best Crypto Exchanges has you covered.  The Crypto Exchanges recommended here offer everything from simplicity and convenience to advanced trading platforms and profit sharing. 

Best Crypto Exchanges Banner

If you want to learn more about the methods and tools that can be used to find Great Crypto Projects, then be sure to check out Crypto Renegade’s strategy for How To Find The Best Cryptocurrency.

Crypto Strategy Banner

For those people that don’t have any money to invest right now, or just want to understand the technology a bit more, you’ll definitely want to check out Crypto Renegade’s Free Crypto Strategy and start collecting Free Coins today!

Free Crypto Banner

What do you think about cryptocurrency? Do you have any questions about it? Be sure to leave a comment below.

This site uses Akismet to reduce spam. Learn how your comment data is processed.