Nigeria’s foreign exchange market ended the week with naira gaining 6.86 percent against the dollar, following the interventions of the Central Bank of Nigeria (CBN) to boost dollar liquidity in the market.
On a week-on-week basis, the naira, which fell as low as N510 per dollar at the beginning of the week, reversed losses to end at N475/$ on the black market.
Within the week, CBN issued two circulars on diaspora remittances aimed at increasing dollar supply in the market.
On Monday, the CBN amended its foreign exchange rule by allowing beneficiaries of diaspora remittances through the international monetary transfer operators (IMTO) to have such inflows in foreign currency (US dollar) through the designated bank of their choice.
The move was to deepen the foreign exchange market, provide more liquidity, and create more transparency in the administration of diaspora remittances into Nigeria.
“Nigeria is expected to attract more remittances from its diaspora, which is likely to boost FX liquidity as the CBN has eased rules that had restricted inflows. Now diaspora remittances would be paid in US dollars or into a domiciliary account at market rates,” analysts at FSDH research said on Friday.
“Earlier, remittances could be paid in naira, and the CBN had restricted domiciliary account usage,” the analysts said.
On Wednesday, the apex bank gave clarification on the procedure for receipt of diaspora remittances, saying all international money transfer operators must ensure that all funds in favour of beneficiaries/recipients in Nigeria be deposited into the agent banks’ correspondent account.
The two circulars, signed by Ozoemena Nnaji, director, trade and exchange department, helped to strengthen the naira by 7.8 percent (or N40) to N470 on Thursday, after falling to N510, the lowest since 2017.
Over 5,000 BDC operators across the country received dollar disbursement from the CBN on Tuesday and Thursday, which also helped to shore up the value of the local currency.
Naira remained stable at N395.00 per dollar at the Investors and Exporters (I&E) forex window on Thursday and Friday. Analysts at FSDH Research said most participants maintained bids between N385.00 and N404.91 per dollar.
The daily FX turnover rose significantly by 173.33 percent to $158.42 million on Thursday from $57.97 million recorded on Wednesday, data from the FMDQ indicated.
However, naira weakened by 1.06 percent day-on-day as the dollar traded at N475 on the black market on Friday compared to N470 traded on the previous day.
Dollar traded at N478 in some parts of Lagos where black market operators operate as a result of increased demand.
The foreign exchange market has been under pressure since March 2020 following a sharp drop in oil prices as a result of Covid-19 pandemic.
At the Bureau De Change (BDC) segment of the market, the naira also weakened by 2.12 percent or (N10) to N480 on Friday as against N470 on Thursday.
