CBN Policy Reversal Gives Naira Momentum Against Dollar At Parallel Market

The naira on Wednesday gained against the dollar to close at N485 at the unofficial market after hitting its worst level in three years.

The development came after the Central Bank of Nigeria on Monday unexpectedly reversed its rule on diaspora remittances as Nigerians were remitting dollar to the country through backdoors to get exchange at the best possible rate.

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Africa’s economic powerhouse operates multiple exchange windows as the apex bank pegged its rate at N379, while the Import and Export Window closed on Wednesday at N394 against the dollar.

The currency at the I&E Window fell 0.96 per cent against the N392.54 traded on Tuesday. At the spot market, the naira was fixed N390.5 against the dollar.

The dollar crunch had on Monday seen the naira trade at N500 per dollar being the worst rate since 2017.

Africa’s largest economy has seen its currency devalue over shortage of forex supplies due to the ailing global crude oil prices.

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In a recent circular, the apex bank said beneficiaries of Diaspora remittances through were allowed to receive the inflows in either the dollar or into their domiciliary accounts.

The CBN said, “Recipients of remittances may have the option of receiving these funds in foreign currency cash (US Dollars) or into their ordinary domiciliary account.

“These changes are necessary to deepen the foreign exchange market, provide more liquidity and create more transparency in the administration of Diaspora remittances into Nigeria.”

The Central Bank governor, Godwin Emefiele, recently criticised the parallel market to be marred with irregularities, saying the market was not a determinant of the value of the currency.

But a financial analyst, Kalu Aja, argued that a country’s unofficial rates represented the true value of every currency.

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