Forex

Diaspora Remittance: Understanding ‘CBN Naira 4 Dollar’ Policy

Published

2 years ago

March 10, 2021

The new “Naira 4 Dollar” initiative was introduced because of the failure of the diaspora remittance policy announced in November 2020, when the apex bank adjusted its diaspora remittance policy to checkmate dollar-bank-transfer being carried out between diaspora remittance recipients and forex buyers.

The strategy then was to receive remittance in a domiciliary account and transfer it to operators in the parallel market or whoever was in need of it at a black market rate, and since withdrawing means you will be paid the equivalent in Naira at a bank rate of N362/$ before it was adjusted to N391/$, several diaspora remittance recipients stopped withdrawing their remittance inflow but transfer to forex dealer’ accounts.

The fact that people were not withdrawing means the dollars were not entering the economy, hence the forex scarcity that plunged Naira to N484 as of today on the black market.

In order to curb the situation, the CBN quickly adjusted its policy to allow people to receive their diaspora remittances in dollars with the hope – the estimated $21 billion per year inflow – would help stimulate productivity and fast track economic recovery.

However, the lockdown caused by COVID-19 is a global occurrence. Many Nigerians in the diaspora were unable to work and were only managing stimulus cheques if they were lucky enough to reside in US, Canada, Australia, Ireland, etc.

For the majority, they have to shut down their businesses and went into a survival mode. Therefore, the CBN strategy to flood the economy with diaspora remittances failed.

In a desperate move to lure them into the economy, especially sensing the nation could plunge back into recession due to weak crude oil production of 1.4 million barrels per day (below 2.2mbpd capacity), falling foreign reserves of $35 billion, weak revenue generation, high unemployment and escalating inflation rate, the apex bank was forced to launch Naira 4 Dollar initiative.

This is because Nigeria is an import-dependent/petrol-dollar economy, meaning it needs to sell crude oil to generate dollars and use the dollar to service its economy, import for consumption.

Here are what could happen if the strategy works

The economy will come alive as diaspora remittance is estimated at about $21 billion per year, it will augment the nation’s dwindling foreign reserves.
Economic productivity will improve and so will GDP growth
New job creation will surge and spending will improve
Internal revenue generation will improve due to import duty, VAT and other charges
Import-dependent businesses will come alive as they will have access to more dollars in a p2p kinda transaction.

Here is why the strategy may not really work

There is a partial lockdown in most developed nations where Nigeria remits the most.

While the central bank thinks it could lure Nigerians in the diaspora with N5 per US Dollar strategy, the plunge in Naira to N483/US Dollar, N675 to a British Pound and N580 to a Euro is enough to encourage, lure and attract anyone that has the money to send to do so. N5/US$ gift won’t make a huge difference if they don’t have it, to begin with. However, it could create a loophole for certain individuals to exploit the system.

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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eNaira

Nigerians Turned to eNaira For Transactions as Naira Scarcity Persists

Published

3 days ago

March 23, 2023

Ojukwu Emmanuel

Recent reports reveal that Nigerians increasingly turned to the nation’s digital currency eNaira as transaction value jumped a whopping 63% to N22 billion ($48 million) amid the ongoing cash crunch bedeviling the country.

The number of eNaira wallets is reported to have jumped more than 12-fold to 13 million since October last year.

Speaking on the recent surge in the adoption of the eNaira, Nigeria’s Central Bank Governor Godwin Emefiele said the eNaira has emerged as the electronic payment choice for financial inclusion and executing social interventions.

He further noted that the Naira circulation in the country had dropped to around 1 trillion Naira from 3.2 trillion Naira in September 2022. Hence, to bridge this deficit, he disclosed that more than 10 billion Naira of the CBN’s digital currency has been minted so far, and about 3.4 billion Naira is in circulation.

The increased rate of the eNaira adoption in Nigeria doesn’t come as a surprise owing to the fact that Nigerians have been struggling with a crippling cash shortage since the CBN policy to redesign the higher denominations (N200, N500, N1,000) of the naira notes.

Currency in circulation slumped to about 1 trillion naira from N3.28 trillion in December 2022 to N1.38 trillion in January and an estimated N982.09 billion in February 2023 representing a 235 percent decline. The shortage of cash has left many individuals in the country of about 218 million struggling to pay for basic needs. Investors King understands that Nigeria which has a $220 billion informal economy, thrives on cash transaction.

Recall that the eNaira was launched by the Central Bank of Nigeria in October 2021, which saw Nigeria become the first country in Africa to launch its digital currency. The CBN disclosed that the eNaira was introduced to increase remittances, foster cross-border trade, improve financial inclusion and enable the government to make welfare payments more easily.

The launch of the CBN digital currency however came as a surprise to a lot of Nigerians, as the CBN has been suspicious of cryptocurrencies, such as Bitcoin, after it issued a directive that prohibited banks from taking part in financial transactions involving cryptocurrencies, which many Nigerians often use as a hedge against naira depreciation.

At the initial launch of the eNaira, it was faced with widespread rejection and less usage from Nigerians. A year after the launch of the eNaira, less than 0.5% of Nigerians were using it. In a bid to encourage the digital currency adoption at the grassroots level, the CBN offered Keke NAPEP (tricycle taxis) and their customers a 5% discount for using the CBDC as means of payment.

In November 2022 one year after the eNaira launch, the CBN celebrated 700,000 completed eNaira transactions valued at ₦8 billion ($17.4 million). If the shortage of cash persists in the country, it is not far-fetched to say that the eNaira transaction rate would record another significant increase.

Naira

Dollar to Naira Exchange Rate Today March 23, 2023

Published

3 days ago

March 23, 2023

Investors King

As of March 23, 2023, the dollar to naira exchange rate is 1 USD to 754 NGN at the black market. This means that for every one US dollar, you can exchange it for ₦754, Investors King reports.

This digital business news platform has obtained the official dollar to naira exchange rate in Nigeria today including the Black Market rates, Bureau De Change (BDC) rate, and CBN rates.

This rate is subject to change depending on a variety of factors including global economic trends, political developments, and market fluctuations. However, you can buy and sell 1 USD at ₦754 and ₦750 as of the time of writing today.

What is the current exchange rate of the dollar to naira in the black market today?

According to Investors King, as of the time this report was filed, a dollar can be purchased at the Lagos parallel market (black market) for N754 and sold for N750.

Exchange Rate of Dollar To Naira in Black Market Today?

Dollar to Naira (USD to NGN)	Black Market Exchange Rate Today
Buying Rate	750
Selling Rate	754

Investors King understands that although the dollar to naira opened at N754 per $1 in the parallel market today, the Central Bank of Nigeria (CBN) does not acknowledge the parallel market, also referred to as the black market. The CBN has instructed individuals in need of forex to approach their bank as the I&E window is the sole recognized exchange.

On Thursday, March 23rd, 2023, individuals in the black market purchased one US dollar for N750 and sold it for N754. This shows that the value of the Naira has improved slightly to Wednesday, March 22nd, 2023, when the local currency was exchanged at N750 and sold it for N755.

To stay informed about the dollar to naira exchange rate, there are a number of reliable sources that you can turn to. Here are some tips for staying up-to-date:

Check the Central Bank of Nigeria’s website: The CBN is responsible for regulating the country’s monetary policy and is a reliable source for the latest exchange rates. You can check their website regularly for updates.
Follow financial news outlets: Financial news outlets such as Investors King, Bloomberg, Reuters, and CNBC provide regular updates on the global currency markets, including the dollar to naira exchange rate.
Use online currency converters: There are a number of online currency converters that allow you to quickly and easily check the exchange rate between the dollar and the naira.
Follow social media accounts of financial experts: Following social media accounts of financial experts such as analysts, economists, and financial advisors can give you valuable insights into the latest trends in the currency markets.

By staying informed about the dollar to naira exchange rate, you can make informed decisions when buying or selling foreign currencies. Whether you are a business owner looking to trade in foreign currencies or an individual looking to invest in the currency markets, knowledge of the latest exchange rates is key to success. Keep these tips in mind and stay informed about the latest trends in the global currency markets.

Business

Dollar to Naira Exchange Rate Today March 22, 2023

Published

4 days ago

March 22, 2023

Investors King

As of March 22, 2023, the dollar to naira exchange rate is 1 USD to 755 NGN at the black market. This means that for every one US dollar, you can exchange it for ₦755, Investors King reports.

This digital business news platform has obtained the official dollar to naira exchange rate in Nigeria today including the Black Market rates, Bureau De Change (BDC) rate, and CBN rates.

What is the current exchange rate of the dollar to naira in the black market today?

According to Investors King, as of the time this report was filed, a dollar can be purchased at the Lagos parallel market (black market) for N755 and sold for N750.

Exchange Rate of Dollar To Naira in Black Market Today?

Dollar to Naira (USD to NGN)	Black Market Exchange Rate Today
Buying Rate	750
Selling Rate	755

Investors King understands that although the dollar to naira opened at N755 per $1 in the parallel market today, the Central Bank of Nigeria (CBN) does not acknowledge the parallel market, also referred to as the black market. The CBN has instructed individuals in need of forex to approach their bank as the I&E window is the sole recognized exchange.

On Wednesday, March 22nd, 2023, individuals in the black market purchased one US dollar for N750 and sold it for N755. This shows that the value of the Naira has declined slightly to Wednesday, March 21st, 2023, when the local currency was exchanged at N748 and sold it for N753.

To stay informed about the dollar to naira exchange rate, there are a number of reliable sources that you can turn to. Here are some tips for staying up-to-date:

Check the Central Bank of Nigeria’s website: The CBN is responsible for regulating the country’s monetary policy and is a reliable source for the latest exchange rates. You can check their website regularly for updates.
Follow financial news outlets: Financial news outlets such as Investors King, Bloomberg, Reuters, and CNBC provide regular updates on the global currency markets, including the dollar to naira exchange rate.
Use online currency converters: There are a number of online currency converters that allow you to quickly and easily check the exchange rate between the dollar and the naira.
Follow social media accounts of financial experts: Following social media accounts of financial experts such as analysts, economists, and financial advisors can give you valuable insights into the latest trends in the currency markets.