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CBN Defends Arabic Inscriptions on Naira Notes, Refuses Removal

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The Central Bank of Nigeria has defended the Arabic inscriptions on Nigeria’s currencies against a lawsuit seeking its removal

The apex bank argued that the Ajami (Arabic) inscription is not a symbol of Islam or its mark but an inscription to aid non-English speakers who are literate in the use of Ajami for trade.

However, Chief Malcom Omirhobo, the lawyer that dragged the apex bank to court, argued that an Arabic inscription on the nation’s currency has naturally portrayed and branded Nigeria as an Islamic nation, against its constitutional status of a secular state.

Omirhobo further stated that the action of the apex bank violates section 10 and 55 of Nigeria’s constitution.

Section 10 reads: “The government of the Federation or of a state shall not adopt any religion as state religion.”

Therefore, Omirhobo prayed that the court compelled the central bank from “further approving, printing and issuing naira notes with Arabic inscriptions, bearing in mind that Nigeria is a secular state.

The Lagos based lawyer also prayed that the court mandates the central bank to replace the Ajami inscriptions with either English language or any of the nation’s three official languages, Yoruba, Hausa or Igbo.

Abiola Lawal, counsel to the apex bank, in a counter-affidavit, argued that “the Ajami inscriptions on some of the country’s currencies do not connote any religious statements or Arabian alignment.

Lawal insisted that the Ajami inscriptions were not a threat to Nigeria’s unity or secular status.

He said: “The inscriptions on the country’s currencies do not and at no time have they threatened the secular statehood of the nation or have they violated the Constitution of Nigeria, as every design and inscription was finalised with the approval of the relevant government bodies.”

Lawal stated that “Ajami inscriptions” on the naira notes dates back to the colonial era “and they do not imply that Arabic is an official language in Nigeria.

Quoting CBN, he said, “The naira notes retained the inscriptions with Ajami since 1973 when the name of the Nigerian currency was changed to naira from pounds.

“The Ajami was inscribed on the country’s currency by the colonialists to aid those without Western education in certain parts of the country, who, back then, constituted a larger part of the populace.

“The Ajami is not a symbol or mark of Islam but an inscription to aid the populace uneducated in Western education in ease of trade.”

Finally, Lawal said the removal of Arabic inscriptions “would cost the tax-paying Nigerians and the Federal Government colossal sum of money to discard the existing naira notes and print new ones in satisfaction of the plaintiff.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Forex

Nigeria’s Diaspora Remittances Decline by 28 Percent to $16.8 Billion in 2020

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US dollar - Investors King

Nigeria’s diaspora remittances declined by 27.7 percent or $4.65 billion from $21.45 billion in 2019 to $16.8 billion in 2020, according to the World Bank Migration and Development report.

A critical look into the report shows remittances to sub-Saharan Africa declined by 12.5 percent in 2020 to $42 billion. This was largely due to the 27.7 percent recorded by Africa’s largest economy, Nigeria, which accounted for over 40 percent of the total remittance inflows into the region.

The report noted that once Nigeria’s remittance inflows into the region are excluded, remittances grew by 2.3 percent in 2020 with Zambia recording 37 per cent.

Followed by 16 percent from Mozambique, 9 percent from Kenya and 5 percent from Ghana.

The decline was a result of the global lockdown that dragged on the livelihood of most diaspora and unclear economic policies.

In an effort to change the tide, the Central Bank of Nigeria (CBN) introduced a Naira 4 Dollar Scheme to reverse the downward trend and boost diaspora inflows into the economy.

However, the reports revealed that other external factors like insecurities, global slow down, weak macroeconomic fundamentals, etc continue to discourage capital inflows.

On Tuesday, the CBN, in a new directive, announced it has halved dollar cash deposit from $10,000 to $5000 per month.

The move is geared towards discouraging overreliance on the United States Dollar and encourage local patronage and production.

Mr. Guy Czartoryski, Head of Research at Coronation Asset Management, had said in the report, “We looked at the top 10 banks and the breakdown of their deposits showed that 40 per cent of their deposits are in dollars and it is quite astonishing.”

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Forex

Deposit Money Banks Reduce Dollar-Cash Deposits by 50 Percent to $5000/Month

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United States Dollar - Investors King Ltd

Nigeria’s Deposit Money Banks (DMBs) have reduced the amount of United States Dollars that customers can deposit into their domiciliary accounts by 50 percent from $10,000 to $5,000 per month.

A bank official who preferred not to be mentioned confirmed the new policy to Investors King.

He, however, stated that the new policy does not apply to customers making electronic transfers as well as oil and gas companies and dollar payments into government accounts.

Checks revealed that the Central Bank of Nigeria (CBN) introduced the new policy to discourage the strong appetite for the United States Dollar, which has continued to rise.

A recent report has shown that despite persistent dollar scarcity, around 40 percent of bank deposits in the nation’s top ten banks were in dollars.

Mr. Guy Czartoryski, Head of Research at Coronation Asset Management, had said in the report, “We looked at the top 10 banks and the breakdown of their deposits showed that 40 per cent of their deposits are in dollars and it is quite astonishing.”

According to an analyst at ARM Securities Limited, Mr. Olamofe Olayemi, “this has to do with how much confidence the people have in the naira. Over time, we have seen significant depreciation in the naira.

“If you look at what happened in 2020, no one expected that the naira would be devalued twice in that year and even the outlook, this year is suggesting further depreciation in the naira.

“So, it makes sense to a lot of people to store their money in dollars. But, from the CBN standpoint, you agree with me that there is dollar scarcity.”

He, therefore, argued that the new policy might discourage financial inclusion and encourage cash outside the banking system.

Again, it is important for the flow of money to be captured in the system,” he said.

The CBN had extended its Naira 4 Dollar Scheme last week to further encourage dollar inflow into the Nigerian economy.

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Naira

Naira Closed at N411.25 to US Dollar at NAFEX Window

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Naira Dollar Exchange Rate - Investors King

The Nigerian Naira declined further against the U.S Dollar on Tuesday ahead of the Ramadan holiday to trade at N411.25 to a single U.S Dollar at the Nigerian Autonomous Foreign Exchange (NAFEX) window.

The local currency plunged as low as N420.23 per dollar during the trading hours of Tuesday despite opening the day at N410.33/US$ before settling at N411.25 to a US dollar.

Investors on the window exchanged $98.33 million on Tuesday.

At the parallel section of the foreign exchange, Naira traded at N483 to a United States Dollar; N673 to a British Pound and N580 to a Euro.

Foreign exchange rates remained largely unchanged at the bureau de change section, with the Naira trading at N482 to a U.S Dollar; N674 to a British Pound and N584 to a Euro.

Several factors continue to weigh on the Nigerian Naira, especially with the foreign reserves hovering around record low and crude oil output not at an optimal level.

Other factors like rising inflation rate and drop in economic activity due to COVID-19 effect on the economy and lack of enough fiscal buffer to cushion the economy.

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