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Citizens, Banks Await CBN’s Directive on Old Naira Notes Acceptance Despite Supreme Court Ruling

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Godwin Emefiele - Investors King

Despite the Supreme Court ruling extending the use of the old naira notes as legal tender till December 31, 2023, Nigerians and commercial banks have insisted on receiving approval from the Central Bank of Nigeria, CBN.

Investors King reports that banks are unwilling to accept the old naira notes which in turn made traders and service providers reject the notes.

Meanwhile, bank customers, financial analysts and business owners have demanded the recirculation and use of the old naira notes as directed by the Supreme Court.

Bank officials have noted that they will comply with the apex court ruling when they get CBN’s directive to that effect.

“Banks would obey what CBN says, not the Supreme Court. Banks in Nigeria are heavily regulated, and we only listen to what the CBN says. Despite the ruling, we still need to hear from our regulator,” an official said.  

He further explained that the CBN reports to the President who then issues directives on matters.

Another official from Keystone Bank who does not want his name mentioned stated that no commercial Bank can do anything contrary to CBN directive, adding that the old naira notes are not available in the bank.

“We can’t do anything contrary to CBN. They will direct what next and probably from Monday we shall get more updates from our management when they meet on Monday.

“We don’t have the old notes and we are not answerable to the Supreme Court. The CBN must  send  a circular before we can implement any directive.”

In conversations with financial analysts and businessmen, the CBN was enjoined to comply with the supreme court judgement to reduce inflationary pressure and revive economic activities which was brought low by cash scarcity.

The Chief Executive Officer, Wyoming Capital and Partners, Tajudeen Olayinka, said the CBN, though introduced a good policy but with the process and inadequate knowledge, it crumbled.

“CBN got the whole thing wrong by introducing a policy without good knowledge of policy/system dynamics, and it is sad that it started and ended in ignominy,” he said.

On his part, the President, the Association of Capital Market Academic of Nigeria, ACMAN, Prof Uche Uwaleke called for immediate adoption of the supreme court ruling to reduce the difficulties currently faced by the citizens.

“The time frame till Dec 31, 2023 provides an opportunity for the CBN to re-assess the policy and improve on its implementation without causing distortions to the economy,” he added.

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Naira

Naira’s Upsurge Strains Nigeria’s Foreign-Exchange Reserves

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As the Nigerian Naira continued to rebound from its record low against its global counterparts, the nation’s foreign exchange reserves has been on the decline, according to the data published by the Central Bank of Nigeria (CBN) on its website.

CBN data showed liquid reserves have plummeted by 5.6% since March 18 to $31.7 billion as of April 12, the largest decline recorded over a similar period since April 2020.

The recent surge in the Naira follows a series of measures implemented by the Central Bank to liberalize the currency market and allow for a more flexible exchange rate system.

These measures included devaluing the Naira by 43% in January and implementing strategies to attract capital inflows while clearing the backlog of pent-up dollar demand.

Charles Robertson, the head of macro strategy at FIM Partners, acknowledged the Central Bank’s efforts to restore the Naira to a realistic exchange rate, suggesting that it aims to stimulate investment in the local currency and enhance liquidity in the foreign exchange market.

Despite the rapid depletion of foreign-exchange reserves, Nigeria still maintains a significant cushion, bolstered by a rally in oil prices and inflows from multilateral loans.

Gross reserves of approximately $32.6 billion provide coverage for about six months’ worth of imports, according to the International Monetary Fund.

The Central Bank’s disclosure last month that it had cleared a backlog of overdue dollar purchase agreements, estimated at $7 billion since the beginning of the year, indicates progress in addressing longstanding currency challenges.

However, uncertainties remain regarding the extent of dollar debt retained by the Central Bank as revealed by its financial statements late last year.

Furthermore, the decline in foreign-exchange reserves persists despite a surge in inflows into Nigeria’s capital markets, driven by interest rate hikes and increased attractiveness of local debt.

Foreign portfolio inflows exceeded $1 billion in February alone, contributing to a total of at least $2.3 billion received so far this year, according to central bank data.

Analysts remain cautiously optimistic about the trajectory of Nigeria’s foreign-exchange reserves, anticipating stabilization or potential growth fueled by anticipated inflows from Afreximbank, the World Bank, and potential eurobond issuance.

Also, the resurgence of oil prices and the expected return of remittances through official channels offer prospects for replenishing reserves in the near future.

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Dollar to Naira Black Market Today, April 17th, 2024

As of April 17th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,50 NGN in the black market, also referred to as the parallel market or Aboki fx.

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As of April 17th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,50 NGN in the black market, also referred to as the parallel market or Aboki fx.

For those engaging in currency transactions in the Lagos Parallel Market (Black Market), buyers purchase a dollar for N1,70 and sell it at N1,060 on Tuesday, April 16th, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate improved when compared to today’s rate below.

This black market rate signifies the value at which individuals can trade their dollars for Naira outside the official or regulated exchange channels.

Investors and participants closely monitor these parallel market rates for a more immediate reflection of currency dynamics.

How Much is Dollar to Naira Today in the Black Market?

Kindly be aware that the Central Bank of Nigeria (CBN) does not acknowledge the existence of the parallel market, commonly referred to as the black market.

The CBN has advised individuals seeking to participate in Forex transactions to utilize official banking channels.

Black Market Dollar to Naira Exchange Rate

  • Buying Rate: N1,050
  • Selling Rate: N1,040

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Naira Appreciates to N1,136/$ Officially, N1,050/$ Parallel Market

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The Nigerian Naira appreciated to N1,136 against the United States Dollar at the official market and rose to N1,050 at the parallel market.

At the official foreign exchange market, data from the FMDQ Exchange revealed that the Naira strengthened by 6.1 percent or N69 from its previous rate of N1,205/$ recorded on Friday to N1,136/$ on Monday.

This surge underscores the effectiveness of recent foreign exchange directives implemented by the Central Bank of Nigeria (CBN), aimed at stabilizing the Naira and bolstering liquidity in the market.

At the parallel market, the Naira appreciated to N1,050 against the Dollar, reflecting an improvement in the currency’s value in informal trading circles.

This resurgence has brought renewed hope to traders and businesses operating in the informal sector, as they anticipate further strengthening of the Naira in the coming days.

The improved exchange rate follows a series of strategic interventions by the CBN to address foreign exchange challenges and stabilize the Naira.

The positive momentum in the forex market has been further reinforced by a surge in total inflows into the Nigerian Autonomous Foreign Exchange Market (NAFEM), which increased by 41.7 percent to $3.75 billion in March, compared to $2.64 billion in February.

Commenting on the recent developments, analysts at Afrinvest expressed optimism about the continued strengthening of the Naira, attributing it to the CBN’s intensified efforts to bolster liquidity in the market.

They anticipate further improvements in the exchange rate as the apex bank maintains its proactive stance on forex management.

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