Naira falls to 480/$ despite rising forex reserves
The naira extended its decline on Tuesday, falling to 480 against the dollar at the parallel market, despite the rise in the country’s foreign exchange reserves.
The local currency started depreciating again more than two weeks ago after recovering from a record low of 500/$1 it plunged to on Nov. 30, 2020. It rose to 470/$1 on Jan. 7 but started falling the next day.
The forex reserves, which have been on an upward trajectory since Dec. 18, when it stood at $34.84bn, rose to $36.52bn on Jan. 25, according to the Central Bank of Nigeria.
The Monetary Policy Committee, at the end of its meeting on Tuesday, commended the CBN’s effort of improving liquidity in the foreign exchange market.
It, however, noted the need to continue to explore avenues to improve inflow from sources such as the International Money Transfer Operators, diaspora remittances and non-oil export promotion, given the current trajectory of crude oil prices.
“These sources, in the view of the committee, would boost foreign exchange supply and ease the current exchange rate pressure,” the MPC said in its communique.
The CBN announced early December a new policy initiative in a bid to boost remittance inflows and foster an environment that would enable faster, cheaper, and more convenient flow of remittances back to Nigeria.
According to the new policy, beneficiaries of diaspora remittances, through international o transfer operators, shall henceforth receive such inflows in foreign currency (US dollars) through the designated bank of their choice.
It said such recipients of remittances might have the option of receiving these funds in foreign currency cash or into their ordinary domiciliary account.
The apex bank insisted last Wednesday that all Deposit Money Banks must close all Naira General Ledgers through which the naira remittances were being carried out.
