The difference between the official exchange rate of naira to the U.S. dollar and that of the parallel market tightened to its smallest in three weeks, following the Central Bank of Nigeria (CBN)’s introduction of a strategy to ramp up dollar supply to bureau de change operators.
The gulf between both rates narrowed to 24% on Thursday from 32%, following Monday’s announcement by the CBN that it would permit recipients of diaspora remittances to be paid in a foreign currency (dollar).
Data from abokiFX, which collates rates from informal street traders, shows naira has gained 6% on the black market since Monday, exchanging at 470 to a dollar on Thursday. That means naira was 3.1% stronger than the dollar, given that it exchanged at 485 on Wednesday.
But the rate of exchange at the spot market also called the Investors & Exporters (I&E) forex window fell by 0.6% to 391.90.
The CBN ordered lenders to pay recipients of overseas remittances through international money transfer operators in dollar to stimulate supply of the greenback. Prior to the announcement, beneficiaries could only access such funds in naira after conversion.
Low dollar liquidity at the I&E forex window has triggered demand in the black market where rate is loosely determined.
Turnover was up by 173.3%, rising from $57.97 million reported at the previous session to $158.42 million, according to data from FMDQ Securities Exchange.
Aminu Gwadebe, president of the Association of Bureau de Change Operators of Nigeria has linked the crash in the value of naira to illicit practices among currency speculators such as hoarding and illegal cash evacuations across Nigeria’s borders.
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