Naira Firms Up At Parallel Market

The naira yesterday made a sudden recovery in the parallel market, following the Central Bank of Nigeria’s (CBN’s) easing of forex policies. The naira appreciated to N295 against the dollar from N305 on Friday, after the apex bank lifted the ban on dollar transfers and allowed dollar deposits into domiciliary accounts.

The local currency has remained stable in the official market, exchanging for N199 to a dollar.

Association of Bureau De Change Operators of Nigeria (ABCON) President Aminu Gwadabe said the naira was exchanging at N291/293 against the dollar in the morning but closed later at N295.

He said although the CBN did not supply dollar to the market, its relaxation of forex restrictions that allowed banks to accept dollar deposits and transfer foreign currency deposits has helped shore up the value of the naira.

CBN Spokesman, Ibrahim Mu’azu, said the apex bank decided to reverse the policy because its finding shows that currency substitution by customers which made it enforce it in the first place has been tackled.

He said bank customers were before now, converting naira to dollar, and depositing the proceeds with the hope that the dollar will continue to appreciate in both the parallel and official markets.

But other market sources believe the lifting of the over six-month old dollar transfer ban, followed outcry from local and international stakeholders who insisted that a restriction on such transfers is not only killing businesses but has led to diversion of huge forex to neighbouring countries of Ghana, Togo and Cotonu.

In wake of the policy implementation, Nigerian importers were diverting the payment for their imports to these neigbouring countries and the Port of Tema and Tokoradi Port in Ghana as well as the Port Autonome de Cotonou, in Benin Republic.

The lifting of the CBN’s ban on dollar deposit transfer, is part of the gradual relax of its stringent foreign exchange (forex) policies triggered by sharp drop in crude oil prices and reduced inflow of petrodollars.

It is also in response to International Monetary Fund (IMF) advice that the polices should be relaxed to avoid alienating Nigeria from its international trade partners.