Market News

Naira falls against dollar as CBN vows sanctions over remittances

By Abdulkareem Mojeed

Naira weakened against the U.S. dollar on Thursday at the Investors & Exporters (I&E) window of the foreign exchange market, data from the FMDQ Security Exchange where currencies are officially traded showed.

Naira closed at N394.17 at the Friday trading session, representing N0.17 or 0.04 per cent decrease from N394.00, the rate at which it closed at the previous session.

The depreciation happened as turnover contracted by 42.2 per cent, with $44.51 million recorded as against the $77.04 million posted on Thursday.

The local unit witnessed an intraday high of N390 and a low of N39.700 before closing at N394.17.

In a similar manner, data from abokiFX.com, a website that collates parallel market rates in Lagos, showed naira closed at N477 to a dollar, N2 or 0.42 per cent weaker than N475, after staying rooted to that spot since the beginning of the week.

That leaves the spread of N82.83 between the unofficial market and the I&E window exchange rates, which translates to a gap of 17.5 per cent .

The continuous widening of the spread between the rates at which naira is traded at both markets has been attributed to the decline in dollar inflow from crude, which contributes more than 90 per cent of Nigeria’s foreign exchange earnings, following an oil price crash in April and the pandemic outbreak.

As part of efforts to remedy this, the Central Bank of Nigeria had in December, directed International Money Transfer Operators (IMTOs) and commercial banks in the country to pay beneficiaries of diaspora remittances only in dollar, so as to deepen liquidity in the foreign exchange market and create transparency in the administration of diaspora remittances into Nigeria.

The apex bank in a memo on Friday vowed to sanction IMTOs that are still, despite its directive, paying remittances in the local currency.