Naira Records N20 Gain Against United States Dollar Following New CBN Rule - Mackenzie Sky Blog

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Thursday, December 3, 2020

Naira Records N20 Gain Against United States Dollar Following New CBN Rule

Naira to Dollar rate
Central Bank of Nigeria (CBN)
The Nigerian currency, Naira, yesterday reversed its two weeks depreciation trend in the parallel market, recording N20 gain against the United States Dollar closing at N470 per dollar.

The new CBN rule which allowed beneficiaries of diaspora remittances and foreign exchange transfers into domiciliary account, to collect the proceed in foreign currency cash, halted the dwindling fortunes of the local currency.

According to The Vanguard, the rule was introduced by the CBN on Monday November 30th and has resulted that the Naira gained N20 against the dollar as the parallel market exchange rate dropped to N470 per dollar from N500 per dollar on Monday.

The Naira had earlier depreciated by N30 against the dollar, as the parallel market exchange inched closer to N500 per dollar on Monday November 30th from N470 per dollar on Friday November 20th 2020.

This trend continued yesterday morning, howbeit on a larger scale, as the parallel market exchange rate further dropped to N470 per dollar from N490 per dollar previous day, translating to N20 appreciation for the dollar. 

Thus, the naira had reversed the N30 loss against the dollar since November 20th, 2020.

The sharp appreciation of the Naira according to Aminu Gwadabe, President Association of Bureaux De Change Operators of Nigeria (ABCON) shows the effectiveness of the new CBN rule on the receipt of diaspora remittances. 

“Certainly, those hoarding foreign exchange better sell now otherwise they will lick their wounds,” Gwadabe stated

Commenting further on how the new rule will impact dollar supply and the activities in the BDC subsector, Gwadabe added that: 

“The monopoly of (banks) is broken and the policy will induce liquidity in the BDC subsector.
“Nigeria is expected to close the year with over $20 billion diaspora remittances despite the pandemic in 2020. 

“The beneficiary is free to collect his proceeds in foreign currency cash and trade it in the BDC subsector which will lead to true price equilibrium in the market.”

Meanwhile the Central Bank of Nigeria, CBN, has also directed all banks’ Managing Directors to immediately close all Naira Ledger Accounts meant for receiving proceeds from the International Money Transfers Operators, IMTOs.

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