CBN Moves To End Gap Between Official, Black Market Rates

PIX: CBN Building

The Central Bank of Nigeria (CBN) will try to eliminate the spread between the official and black market exchange rates against the dollar, the Finance Minister, Ms Kemi Adeosun, has said.

The naira is trading on the parallel market some 40 per cent lower than the official rate, as low global crude prices have dried up vital oil revenues and pushed Africa’s largest economy into recession.

The CBN scrapped a 16-month-old peg of N197 to the dollar in June, but it continues to trade in the official market, so that the naira remains far stronger against the dollar there than on the parallel market.

The government has blamed the black market for damaging the already shaky economy.

“The CBN is working on the elimination of arbitrage,” Adeosun told Reuters by text message on Tuesday, without saying how this would be done.

She earlier told a conference that the CBN was working on removing the price difference.

Adeosun said this had been in response to a question about manufacturers not getting incentives to produce, given an arbitrage opportunity.

A CBN spokesman, Isaac Okorafor, said the apex bank was working towards “ensuring that the forex market operates as effectively as we would envisage”.

He said the aim was to “ensure there is no black market,” but did not give details of how this would be achieved.

The naira has traded around N305.5 to the dollar on the official interbank market since August, while it was quoted at N487 to the dollar on the parallel market on Monday.