The Central Bank governor announced Wednesday after months of pressure to control a spiraling crisis in Africa’s biggest economy.
Gov. Godwin Emefiele told reporters the naira rate will be “market-driven” from June 20.
Critical foreign currency shortages caused by slumping oil prices forced a policy change that President Muhammadu Buhari for months had resisted. The bank had defended the naira at a rate of 197 to the dollar while the currency was trading at up to 370 on the parallel market .
Emefiele indicated a floating naira should abolish a system that encouraged speculators.
There will be only one exchange rate in “an open, transparent system,” he said.
Companies have gone bust, tens of thousands of workers have lost their jobs and militant attacks have shrunk oil production as Nigeria’s economy contracted for the first time in nearly 20 years.
Companies with naira earnings that the government has refused to allow them to repatriate will take a hit. International airlines are holding the equivalent of $600 million at the old exchange rate, according to the International Air Transport Association.
Analysts warn of expected interest rate hikes to tackle double-digit inflation.
“These actions are a down payment on our people’s ability to succeed,” Buhari, under pressure to devalue since his March 2015 election, wrote Wednesday in The Wall Street Journal.
“Longstanding structural imbalances and overdependence on imports have been cruelly exposed,” Buhari wrote. “We are an oil-rich nation that imports most of our gasoline. We are a farming nation that imports most of our basic food staples.”
Many Nigerians criticized the delay. “And they finally float the Naira, 9 months late. It will take us 2 years to recover from this unnecessary stubbornness,” one said on social media.