Nigeria's central bank yesterday floated the official exchange rate of the naira, which instantly lost more than a third of its value against most currencies. President Bola Tinubu, who only took office a fortnight ago, had promised such a reform was imminent and, true to his word, Nigeria's multiple exchange rates now appear to have gone for good.
The benchmark official exchange rate had been USD 1 / NGN 475 on Tuesday, but by Wednesday morning it had slumped to USD 1 / NGN 750, a drop of some 37%. This puts it in line with black-market exchange rates and should steadily remove the need for parallel rates as investment and exports improve and hard-currency shortages diminish.
For expatriate staff living in Nigeria and paid at least partly in foreign currencies, the devaluation means they will receive more local currency for their dollars or euros, effectively making their cost of living cheaper. However, the naira's loss of value will push up import costs, which will have an upward impact on assignees' indices, so the two factors will offset each other to some degree.
If you would like more guidance on how Nigeria's big devaluation might effect your assignees' spending power, do please get in touch.