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Nigerian Governor Takes a Gamble with the Naira

The decision by the Central Bank of Nigeria (CBN) to float the naira freely has come with an unwanted outcome: a historical fall of the value of currency against the US dollar. Intended to curb dollar scarcity and curtail parallel forex exchange markets, the move has sent the naira down by 36% on the official market on June 14. The new policy removed trading restrictions on the official market, forcing the naira to go from 477 per US dollar on June 13 to 750 on June 14. As of June 15, the black market rate stood at 760 per US dollar. The move to float the naira came just days after Nigerian president Bola Tinubu suspended the embattled central bank governor Godwin Emefiele, during whose term the black market for foreign exchange thrived.  However, the willing-buyer-willing-seller mode of forex trading could hurt the economy in the long term, analysts say, and achieve the exact opposite of what the CBN targeted, as sellers seek to offload their US dollars to the highest bidders.