Naira bounces back to N470 in parallel market

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By Adesoba Toluwalope

Naira has reversed its two weeks loss to the dollar by appreciating by N20 to N470 per dollar on Wednesday.

The Naira had earlier depreciated by N30 against the dollar as the parallel market exchange rate rose to N500 per dollar on Monday, December 30, 2020 from N470 per dollar on Friday, November 20, 2020. However, the new rules introduced by the Central Bank of Nigeria on Monday, November 30, had halted the dwindling fortunes of the naira.

The new rules allow beneficiaries of diaspora remittances and foreign exchange transfer into domiciliary account.

On Tuesday, December 1, the naira gained N10 against the dollar at the parallel market exchange rate and the naira got appreciated by N10, resulting to N490 per dollar from N500 per dollar which was made on Monday.

Same trend continued on Wednesday, December 2, on a larger scale, as the parallel market exchange rate further dropped to N470 per dollar from yesterday’s N490 per dollar. Consequently, the naira had reversed the N30 loss against the dollar since November 20, 2020.

According to the President Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, the sharp appreciation of the naira shows the effectiveness of the new CBN rule receipt of diaspora remittances.

“Certainly, those hoarding foreign exchange better sell now, otherwise they will lick their wounds,” he said.

Gwadabe in his statement talked on how the new rule will further impact dollar supply and the activeness in the BDC subsector.

“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 is still huge. Infact, other countries like Kenya and Zimbabwe are recording higher diaspora remittances inflow as a result of skilful 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 the proceeds n foreign cash currency and trade it in the BDC subsector which will lead to the price equilibrium in the market.”

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