CBN increases Dollar supply as Naira gains in parallel market

*Experts say the Central Bank of Nigeria’s new Forex directive deepens Dollar supply and reduces pressures in unofficial exchange markets

Isola Moses | ConsumerConnect

Nigeria’s official exchange rate and the black-market level narrowed to the least in three weeks after the Central Bank of Nigeria (CBN) introduced a measure to increase the supply of US Dollars to licensed money changers, agency report said.

The difference between the two rates fell to 24% Thursday, December 3 from as much as 32% after the regulator’s announcement on November 30 that it would allow beneficiaries of remittances to be paid in Dollars.

The country’s currency, Naira, has strengthened by 6% to 470 per Dollar in the parallel market since Monday, according to abokifx.com, while the spot rate weakened 0.6% to 391.90.

It is recalled that the CBN had directed the Deposit Money Banks (DMBs) in the country to pay Dollars to the beneficiaries of remittances from abroad via international money-transfer operators to boost supply of the US currency, against the way recipients hitherto were paid the Naira equivalent.

The low greenback liquidity at the official exchange window, where the Bankers’ Bank maintains a largely inflexible rate, has increased demand in the parallel market where the rate is freely determined.

Emmanuel Adeleke, an analyst at Asset Resource Management, in Lagos said of the new development that the directive deepened Dollar supply and reduced pressures in unofficial exchange markets.

Adeleke noted that the investors and exporters Forex window, the gap between demand and supply will remain wide.

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