The naira had earlier depreciated by N30 against the dollar, as the parallel market exchange rate rose sharply to N500 per dollar on Monday, November 30th from N470 per dollar on Friday, November 20th, 2020.
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But the new rules introduced by the Central Bank of Nigeria on Monday, November 30th, 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 naira.
As result, the naira gained N10 against the dollar yesterday (Tuesday, December 1st) as the parallel market exchange rate dropped to N490 per dollar from N500 per dollar on Monday. This trend continued this morning, howbeit on a larger scale, as the parallel market exchange rate further dropped to N470 per dollar from N490 per dollar yesterday, translating to N20 appreciation for the dollar.
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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 receipt of diaspora remittances. He said: “Certainly, those hoarding foreign exchange better sell now otherwise they will lick their wounds.”
Commenting further on how the new rule will impact dollar supply and the activities in the BDC subsector, Gwadabe said: “The monopoly of (banks) is broken and the policy will induce liquidity in the BDC subsector. “It is true that the volume of diaspora remittances amidst COVID-19 19 is still huge.
In fact, other countries like Kenya and Zimbabwe are recording higher diaspora remittances inflow as a result of skillful medical doctors abroad. “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 cash currency and trade it in the BDC subsector which will lead to true price equilibrium in the market.”