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Nigerian Currency Recovers Versus US Dollar — Central Bank Says Importers Must Repatriate Forex Earnings

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After hitting a new all-time low of NZ$710 to the dollar at the end of July, the Nigerian currency has rebounded by as much as 10%, a new report says. Initially blaming speculators, the Central Bank of Nigeria said that importers who do not remit foreign exchange earnings could contribute to the depreciation of the naira.

Naira cushioning

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Less than two weeks after hitting a new all-time low, the Nigerian currency bounced back against the US dollar in the parallel market to close at NZ$640/$ on August 3rd. the end-July low of the currency is more than N710 for every dollar.

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According to Businessday report, an increase in the supply of dollars, as well as a decrease in demand for the dollar, contributed to the recovery of the naira exchange rate. However, before the currency was restored, the rapid depreciation of the naira prompted the country’s lawmakers to turn to Governor of the Central Bank of Nigeria (CBN) Godwin Emefiele for answers.

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During his speech to lawmakers, Emefiele, who had previously blamed speculators for the depreciation of the currency, is reported to have argued that the refusal of the Nigerian National Oil Company (NNPC) to transfer funds to the foreign exchange reserve also contributed to the fall of the naira. However, some local reports quoted NNPC officials reject the CBN governor’s claims.

Meanwhile, Egboagwu Ezulu, CBN Deputy Director of Banking Services, quoted in another report attacking importers, whom he accuses of transferring foreign exchange earnings offshore. He said:

We take forex [forex] from this country and dumping to offshore; when we were told to return them. If Nigerians bring FX back, we won’t talk about FX problems. Individuals and businesses face the challenge of doing the right thing.

Ezulu also claimed that CBN introduced an incentive known as RT200 as a way to encourage the repatriation of foreign exchange earnings back to Nigeria. However, the deputy director of CBN said the central bank is watching billions of dollars move out of the country. When billions of dollars are pulled out of the economy, Ezulu says it inevitably leads to increased pressure on the Naira.

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