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Nigeria’s central bank further tightens nose on dollar diversion by IMTOs

By on December 2, 2020 0 151 Views

* IMTOs to pay diaspora remittances into agent bank’s correspondent accounts
* Local bank responsible for payment of dollar cash to recipients
* IMTOs to close local naira account use for settlement prior
* Forex dealers see further appreciation of local currency
* Naira gains vs dollar on parallel market

By Oludare Mayowa

The Central Bank of Nigeria (CBN) on Wednesday directed International Money Transfer Operators (IMTOs), such as Moneygram and Western Union to deposit all dollar remitted through them into local agent banks’ correspondent accounts.

The move, according to some analysts was meant to further tighten the nose on foreign exchange diversion by some IMTOs in connivance with local agent banks.

In a circular signed by its Director of Trade and Exchange, Osemoya Nnaji, the CBN said; “IMTOs must ensure that all funds in favour of beneficiaries/recipients in Nigeria be deposited into the Agent Banks’ correspondent account.

“Agent banks (Deposit Money Banks) in Nigeria will be responsible for final payment to beneficiaries/recipients’ domiciliary account in Nigeria,” the bank said in the document.

The regulatory bank had on Monday directed that IMTOs, such as Moneygram and Western Union pay through their local agent banks dollar cash to beneficiaries/recipients of diaspora remittances.

The move has since spurred revaluation of the local currency on the domestic parallel forex market as the naira has recovered lost ground against the greenback.

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Though the President of the Association of Bureau de change Operators of Nigeria (ABCON) Aminu Gwadabe told one of our correspondents on that the naira appreciated to N460 to the dollar at the close of market on Tuesday, Aboki Fx quoted the naira at N495 to the dollar against N500 a dollar previously.

Aboki Fx, an online foreign exchange quote platform also quotes the naira rate at N480 to the dollar middle day on Wednesday, gaining further from the N500 per dollar quoted on Monday.

Analysts said the naira is on the road to recovery in the near term as the CBN policy could boost dollar inflow through official channels, especially as Christmas approaches.

However, the downside to the policy is that the IMTOs could frustrate the central bank policy by hiking commission margin on fund transfer, making it costly for Nigerians in the diaspora to transfer the bulk of their money through official channels.

Many Nigerians abroad already making a kill through operating unofficial fund transfer business; paying naira to beneficiaries through their local currency account and collect dollars from the senders at a premium rate.

Many Nigerians using such unofficial channels said they are happy patronising them because of the elimination of commission margin usually charge by IMTOs and the huge loss to spread between official rate and parallel market rate recipients will be given in Nigeria.

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