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Nigerian currency in "free fall" as flexible forex regime takes off

Xinhua, June 21, 2016 Adjust font size:

The Nigerian naira is now in "free fall" against the U.S. dollar following government's decision to scrap the fixed exchange rate and allow market forces to determine the local currency's value.

The local media on Tuesday reported that the naira had lost about 29 percent of its value, now exchanging at 280 to the USD at the interbank market. At the same market last week, the naira traded at 198.4 to a dollar.

Inter-bank trading under the new guidelines began on Monday while the tenors and rates for the Over The Counter Naira-settled FX Futures would be announced on June 27.

Local financial experts said the new policy will soon normalize the situation of the local currency.

Nigeria announced the new policy last week to deal with the effect of the drop in international oil prices and global growth slowdown which had impacted negatively on the country's economy.

The West African nation had pegged the naira to the dollar at 197-199 since March 2015, even while other oil exporters had let their currencies devalue as global crude oil prices took a downturn.

Nigerian president Muhammadu Buhari had previously said he would not "kill" the local currency by letting it devalue. Endit