Naira hits record low of 1,534.39/$ at official market

… IMF projects external reserves to decline to $24bn

Nigeria’s currency, the naira on Monday fell to a record low of 1,534.39 per dollar at the official foreign exchange (FX) as demand increased amid shortage.

After trading on Monday, naira lost 4.19 percent of its value as one dollar was quoted N1,534.39 as against N1,469.97 quoted on Friday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), data from the FMDQ showed.

Naira also depreciated by 1.33 percent at the parallel market, also known as black market. The dollar traded at the rate of N1,505 on Monday compared with N1,485 on Friday.

“There is scarcity of dollars on the black as the Central Bank of Nigeria (CBN) has blocked the areas where we source dollars,” one street trader told BusinessDay on Monday.

According to the latest country report from the International Monetary Fund (IMF), Nigeria’s foreign reserves are projected to experience a notable decline, plummeting to $24 billion by 2024. This forecast has raised concerns about the economic prospects of Africa’s largest economy, indicating potential challenges on the horizon.

Nigeria’s foreign currency reserves have declined to $3.11 billion as of February 8, 2024, according to the data obtained from the CBN’s website.

In a recent circular issued on January 31, 2024, the Central Bank of Nigeria (CBN) has introduced revised guidelines affecting inbound money transfers to the country. The new directives place stringent restrictions on International Money Transfer Operators (IMTOs) and aim to regulate the flow of funds into Nigeria more closely.

According to the circular, all inbound money transfers to Nigeria facilitated by IMTOs will now be exclusively paid in naira. This payment can be made either through a recipient’s bank account or in cash, with the conversion rate being determined by prevailing rates in the Nigerian Foreign Exchange Market.

Furthermore, the CBN has specified that transfers exceeding the naira equivalent of $200 must be credited directly to the recipient’s bank account. For transfers below this threshold, recipients will still have the option of receiving the funds in naira cash, but they must provide acceptable means of identification.

Acceptable forms of identification include an international passport, driver’s license, national identity card, or the INEC Permanent Voters Card.

Significantly, the revised guidelines also restrict IMTOs from facilitating outbound transfers, effectively limiting their operations to inbound transactions only.

These regulatory changes represent a concerted effort by the CBN to enhance oversight and control over the inflow of funds into Nigeria, with the aim of promoting transparency and accountability in the financial system.

The implementation of these stricter guidelines underscores the CBN’s commitment to ensuring the integrity and stability of the Nigerian financial landscape, while also addressing concerns related to money laundering, illicit financial flows, and currency stability.