Naira weakens on black market as CBN bars MMOs from receiving foreign remittances

Naira depreciated against the United States dollar on the black market on Thursday after the Central Bank of Nigeria (CBN) introduced of a new policy, prohibiting mobile money operators and payment service providers from receiving diaspora remittances.

Naira closed at N478 to a dollar, N2 or 0.42% weaker than the N476 it exchanged for at the previous session, according to abokiFX.com, which collates parallel market rates in Lagos.

That widened the gap between the official rate and the parallel market level to N84 or 21.32%. The market spread has provided arbitrage opportunities for foreign remittances beneficiaries such as exporters and individuals.

On the spot market also called the Investors & Exporters (I&E) forex window, naira appreciated marginally on Thursday, changing hands at N394 to a dollar, compared to the N394.67 rate of exchange at the Wednesday session.

Read also: Naira depreciates across forex markets, as external reserves shed $838m in six weeks

Naira hit an intraday low of N407.25 and touched a high of N386.16 before closing at N394.

The volume of trade in this segment of the currency market saw a 9.6% improvement, with $219.60 million recorded relative to the $200.34 million reported on Wednesday.

Low liquidity at the I&E window, where the CBN maintains a hugely inflexible rate, has scaled up demand in the black market where the rate is loosely determined, making dollar more expensive and weakening the naira.

The International Monetary Fund has enjoined the regulator to enhance greater flexibility in its preferred window to reduce demand in the black market.

Nigeria’s foreign exchange reserves were lifted on Tuesday after the World Bank approved a $1.5 billion loan facility for the country.

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