Tinubunomics: Nigerian Foreign Exchange Market Heading to ₦2000/$1

Amid a 29.9% inflation rate, the Nigerian Foreign Exchange market (NFEM) on Monday recorded a new low of naira to dollar rate at ₦1606.32 to 1US Dollar.

According to the Central Bank of Nigeria, the foreign exchange rate of dollar to naira hits a buying rate of ₦1605.32 and sells for ₦1606.32 to $1 at the official market.

West Africa Weekly gathered that parallel market rate from Zone 4, Wuse Abuja, a bustling hub for currency exchange. The Dollar was bought at ₦1,690.00 and sold at ₦1,700.00 today.

However, prices of the black market rate vary slightly in different locations.

Meanwhile, the CBN had earlier released a circular through the Trade and Exchange Department, depicting its directives to all authorized dealer banks with aims to control liquidity in the domestic foreign exchange market.

In part, the circular reads:

The Central Bank of Nigeria (CBN) has observed that proceeds of crude oil exports by International Oil Companies (IOCs) operating in Nigeria are transferred offshore to fund parent accounts of the IOCs (otherwise referred to as “cash pooling”). This has an impact on the liquidity in the domestic foreign exchange market.

In line with CBN’s ongoing reform in the Nigerian foreign exchange market, it has given measures to address the liquidity flow of foreign currencies in Nigeria, including allowing banks to pool cash on behalf of IOCs, subject to a maximum of 50% of the repatriated export proceeds while the balance of 50% is to be made 90days after from the date of inflow of the export proceeds.

Also, documentation fulfilment is required, including prior approval of the CBN for the repatriation of funds under the “Cash Pooling” transaction and agreement with the parent entity of the IOCs operating in Nigeria.

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Mayowa Durosinmi

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M. Durosinmi is a West Africa Weekly investigative reporter covering Politics, Human Rights, Health, and Security in West Africa and the Sahel Region

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