Forex

CBN Mandates Naira Payments for All Diaspora Remittances

Published

4 months ago

June 27, 2024

The Central Bank of Nigeria (CBN) has issued a new directive requiring all Deposit Money Banks (DMBs) and International Money Transfer Operators (IMTOs) to pay diaspora remittances in Naira.

This directive was announced on Tuesday in a circular dated June 24, 2024 and signed by Dr. W. J. Him, the acting Director of the CBN’s Trade & Exchange Department.

The circular, addressed to all DMBs and IMTOs, stated that this measure is part of the CBN’s commitment to enhancing the efficiency of foreign exchange markets and encouraging greater remittance flows through formal channels.

Key Details of the Directive

According to the circular, the new policy will require IMTOs to access Naira liquidity directly from the CBN or through their Authorized Dealer Banks (ADBs).

This access is intended to facilitate the seamless execution of transactions for the sale of foreign exchange in the market.

The circular also specified that the CBN would offer same-day settlement for transactions confirmed before 12 noon on a trading date, and pricing for transactions would be based on prevailing Nigerian Autonomous Foreign Exchange Market (NAFEM) rates.

Also, the CBN mandated that all regulatory returns be submitted daily by participants, containing all relevant information on the sources of funds. IMTOs are required to confirm their partner banks and provide standard settlement instructions to ensure smooth implementation.

Supporting the Economy

CBN Governor, Mr. Olayemi Cardoso, reaffirmed the apex bank’s commitment to managing inflationary pressures through conventional monetary policies.

In an interview with Bloomberg in London, Cardoso highlighted recent positive trends in the market, including increased liquidity and improved confidence among market participants.

“We collectively committed to doubling remittance flows through formal channels into Nigeria in the immediate short to medium term,” Cardoso said.

He added that a collaborative task force reporting directly to him had been established to drive progress and address any obstacles to achieving this goal.

Broader Economic Impact

The new directive comes at a time when Nigeria’s economy is grappling with significant challenges. The country’s annual inflation rate reached a 28-year high of 33.95% in May 2024.

However, recent data indicates that month-on-month inflation has slowed for the third consecutive month, suggesting the effectiveness of the CBN’s monetary tightening measures.

The CBN has also taken steps to unify Nigeria’s exchange rate system, which Cardoso noted has helped stabilize the Naira.

“We more or less have one rate now, which allows companies to plan,” he said, emphasizing the importance of a predictable exchange rate for economic planning and investment.

Challenges and Future Outlook

Despite these efforts, the CBN’s new policy faces potential challenges, particularly in its implementation. Market participants must adapt to the new Naira payment requirement, and the CBN will need to monitor compliance closely to ensure the directive’s success.

Looking ahead, the CBN remains focused on achieving economic stability through coordinated monetary and fiscal policies.

Cardoso further emphasized the importance of collaboration in managing Nigeria’s macroeconomic fundamentals and providing the best value for the Naira.

The Monetary Policy Committee (MPC) will reconvene next month to review its policy options and chart the way forward for the economy.

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Naira

Naira Appreciates 3.6% on US Dollar, Trades N1,600

Published

3 days ago

October 19, 2024

Iyanuoluwa Martins

Naira to Dollar Exchange- Investors King Rate - Investors King

The Naira rose 3.6 percent on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEX) to exchange at N1,600.78/$1 on Friday, October 18 as the local currency appreciated amid an increased supply.

The domestic currency gained N59.71 on the American currency versus N1,660.49/$1, which it closed in the previous session on Thursday.

Data showed a rise in supply as the turnover published on the FMDQ Group website stood at $350.72 million indicating that the session’s turnover rose by 6.2 percent, indicating a rise of $20.54 million compared to $330.18 million that was published in the last trading session.

Meanwhile, the Naira witnessed a flat outcome against the Pound Sterling and the Euro as it closed on the British currency at N2,153.90/£1 and on the European currency at N1,791.06/€1 quoted in the preceding session.

In the Parallel market, the Naira weakened on the American currency as it closed at N1,690.82 to the US Dollar, a drop of N1.31 compared to N1,689.51/$1 it closed during the Wednesday trading session.

In the past months, the Naira has been volatile against the Dollar at the FX market despite interventions by the Central Bank of Nigeria.

The World Bank also said the Nigerian Naira is among the worst-performing currencies in sub-Sahara Africa at the end of August 2024.

In its latest edition of Africa’s Pulse report, the international organisation said the Naira is at par with the Ethiopian Birr, and South Sudanese Pound in terms of decline in the region.

However, the local currency appreciated in its value against the British Pound Sterling in the official market by N54 to sell at N2,201.93/£1 compared with the preceding session’s N2,147.93/£1 and followed the same pattern against the Euro as it gained N4.58 to quote at N1,835.29/€1 versus the previous day’s rate of N1,839.87/€1.

The local currency also depreciated N16.11 to close at N1,217.18 per Canadian Dollar, compared to Thursday’s N1,201.07 per CAD.

Black Market Rate

Naira Gains on Dollar, Pounds, Others at Black Market, Falls at NAFEX

Published

4 days ago

October 18, 2024

Iyanuoluwa Martins

The Naira gained against the US Dollar in the Parallel segment of the foreign exchange market on Thursday, October 17 as it closed at N1,689.51 to the American currency, a gain of N4.41 compared to N1,693.32/$1 it closed during the Wednesday trading session.

The Naira also gained in its value against the British Pound Sterling in the market by N11.19 to sell at N2,147.93/£1 compared with the preceding session’s N2,159.12/£1 and followed the same pattern against the Euro as it appreciated N8.07 to quote at N1,839.87/€1 versus the previous day’s rate of N1,847.94/€1.

The local currency also appreciated N3.59 to close at N1,201.07 per Canadian Dollar, compared to the previous day’s closing value of N1,204.66 per CAD.

Meanwhile, the Naira depreciated marginally for yet another session against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) to N1,660.49/$1.

The local currency rose fell by 0.05 per cent or N91.01 at the window, according to data obtained from FMDQ Securities Exchange compared to N1,659.69/$1 published in the preceding session on Wednesday.

This occurred as supply rose at the penultimate session as turnover published on the FMDQ Group website stood at $330.18 million indicating that the session’s turnover jumped by 86.4 per cent, indicating that there was a decrease of $153.08 million compared to $177.10 million published the previous day.

The surge in supply could be due to peer-to-peer sales as the Central Bank of Nigeria (CBN) has no actively injected liquidity in the market.

Investors King reports that the CBN in August re-introduced the retail Dutch auction system with the aim to sell US Dollar to FX users on demand basis but after the market witnessed more than $1.1 billion injected into the system, there has been slowdown in the auction.

In a different pattern, the local currency closed flat against the Pound Sterling and depreciated on the Euro at the closing session.

Trading against the British currency, the local currency closed at N2,153.90/£1 while it closed at the rate of N1,791.06/€1, a N9.73 appreciation against N1,800.79/€1 against the Euro.

Naira

Naira Drops 0.04% to N1,659.69/$1 at Official FX Market, Dips at Parallel Market

Published

5 days ago

October 17, 2024

Iyanuoluwa Martins

The Naira fell to N1,659 per Dollar on Wednesday in the official foreign exchange market, the Nigerian Autonomous Foreign Exchange Market (NAFEX).

The local currency fell by 72 Kobo or 0.04 percent to close at N1,659.69/$1 compared with Tuesday’s closing rate of N1,658.97/$1.

The market continued to weigh the recent inflation rise after the National Bureau of Statistics (NBS) on Tuesday said Nigeria’s inflation rose to 32.70 percent in the month of September, the first time after moderating in July and August.

Analysts from the World Bank ranked Nigerian Naira as among the worst-performing currencies in sub-Sahara Africa in 2024, noting that the local currency has lost about 43 percent.

The World Bank, in its latest edition of Africa’s Pulse report, disclosed that the Naira is at the same level with the Ethiopian Birr, and South Sudanese Pound in terms of decline in the region.

The report disclosed that the continued increase in the demand for Dollars and limited Dollar inflow is responsible for Naira depreciation in the last months.

The daily supply of FX as measured by secondary data from FMDQ Securities Exchange Limited indicated that turnover slumped by $40.85 million or 18.7 percent to $177.01 million from $217.86 million.

The Naira weakened its value against the Pound Sterling in the official market by N64.28 to sell at N2,153.90/£1 compared with the preceding session’s N2,089.62/£1.

It followed the same route against the Euro as it depreciated N51.67 to quote the midweek session at N1,800.79/€1 versus the preceding rate of N1,749.12/€1.

In the Parallel market, the Naira weakened on the American currency as it closed at N1,693.32 to the US Dollar, a drop of N29.61 compared to N1,663.71/$1 it closed during the Wednesday trading session.

The Naira also dropped in its value against the British Pound Sterling in the official market by N38.17 to sell at N2,159.12/£1 compared with the preceding session’s N2,120.95/£1 and followed the same pattern against the Euro as it depreciated N31.51 to quote at N1,847.94/€1 versus the previous day’s rate of N1,816.43/€1.

The local currency also depreciated N7.07 to close at N1,204.66 per Canadian Dollar, compared to Tuesday’s N1,197.59 per CAD.