The Central Bank of Nigeria is set to open the interbank market where the Naira will be allowed to trade unhindered against other currencies on Monday.
The apex bank governor, Godwin Emefiele, announced this last week after the Naira's continued depreciation against the dollar on the black market owing to widespread scarcity of the greenback.
Last month, the government removed petrol subsidies a new price band of 130 naira to 145 naira per litre was recommended for fuel stations. In addition, more oil marketers were encouraged to import the commodity into the country.
This new price assumed an exchange rate of 285 naira to $1, compared to the official rate of 199 naira to $1.
In the short term, the CBN is likely to continue to be the main supplier of dollars to the market until foreign investors return.
With one eye on the petrol price, it is likely to kick start the market at a rate that keeps petrol prices stable i.e. somewhere below 285 naira to $1. Last week, naira exchanged at over N300 to the dollar. This means oil marketers will buy dollar at a cheaper rate and will pay less to import fuel into the country.
As a result, fuel prices will likely remain the same or will start to drop, gradually. This will be due to a glut of the product in the market and a "cheaper" dollar.
-247 News
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