Nigerian naira recovers at parallel market as CBN lifts lid on diaspora remittances
By Oludare Mayowa
The Nigerian naira currency gained marginally on the parallel market on Tuesday after the Central Bank of Nigeria (CBN) rolled out new forex policy allowing diaspora remittances to be collected in dollars by recipients.
The naira opened on Tuesday at N497 per dollar better than the N500 a dollar it closed the previous day as dealers are hopeful that the new CBN policy could boost dollar supply in the parallel market and help ease pressure on the local currency.
The CBN in a circular issued on Monday said Nigerians receiving funds from their relatives abroad through money transfer operators such as Western Union and Moneygram now have the option of collecting such money either in local currency or foreign currency.
Prior to the new policy, diaspora remittances are collected in local currency at the official exchange rate, forcing many Nigerians abroad to opt for other unofficial channels to send money to their relatives.
“Such recipients of remittances may have the option of receiving these funds in foreign currency cash (US Dollars) or into their ordinary domiciliary account,” the bank said in the circular.
The CBN said the changes were necessary to deepen the foreign exchange market, provide more liquidity and create more transparency in the administration of Diaspora remittances into Nigeria.
Shortly before the CBN liberalised the diaspora remittances, it had adjusted the exchange rate for the local currency in a bid to align rates at all the segments of the forex markets.
The regulatory bank on Monday moved the exchange rate for the naira to N392 per dollar on the bureau de change market from N383 a dollar previously. The bank also adjusted the rate International Money Transfer Operators (IMTOs) would sell dollars to banks to N388, while banks, in turn, will sell to the CBN at N389 per dollar and the regulatory bank sell to bureau de change at N390 a dollar.
The naira has depreciated rapidly by 7.81 percent on the parallel market month-on-month as dollar shortages hit the economy and the CBN struggles with dollar supply to official markets due to declining forex reserves.
Analysts said the new forex policy could help improved liquidity in the forex market and support the local currency recovery.