NAIJAFEED: naira

Friday, May 12, 2023

Naira hits record low after central bank adjusts spot rate

The Nigerian naira hit a record low of 466 per dollar on the official market on Thursday, after the central bank weakened the currency on the spot market and at its foreign exchange auction as it tries to address a backlog of demand for foreign currency, traders said.

Nigeria's central bank has been adjusting rates to manage demand for foreign currency against its level of foreign reserves while at the same time intervening on the foreign exchange market to keep the currency stable after it has weakened.

The central bank adjusted rates on Wednesday to 465 naira from 460 naira per dollar, traders said, while it sold hard currency to businesses for raw materials and other imports at 630 naira at its last auction on Friday.

"Generally, the market impression is that (FX) rates are moving up," one currency trader said.

The naira, which trades within a range on the official market, has fallen to successive lows due to dollar scarcity, coupled with the central bank's adjustments to manage the backlog of demand for foreign exchange.

The currency later recovered some ground to trade at 463 naira per dollar on the official market on Thursday.

"At the current level, clients are not getting funds," the trader said. "The appetite is to seek more dollars to meet obligations."

The naira eased to 748 against the dollar on the black market as individuals and firms channel unmet currency demand to informal sources.

By Chijioke Ohuocha, Reuters

Video - New currency in Nigeria to affect small businesses according to World Bank

Friday, January 6, 2023

Cash Withdrawals from Government Accounts to be banned in Nigeria

Nigeria will ban cash withdrawals from government accounts from March 1.

Modibbo Tukur, the chief executive of the Nigerian Financial Intelligence Unit (NFIU) said the move was part of efforts to tackle money laundering, according to a Thursday (Jan. 5) Bloomberg report.

“On March 1, if there is a cash withdrawal from a government account, even if it is one naira, we are going to trigger off money laundering and corruption investigations,” he told reporters in Abuja.

In recent months, Nigeria has been taking a hard line on cash transactions as it attempts to digitize its economy.

The government has imposed strict limits on cash withdrawals at ATMs, which will come into effect on Monday (Jan. 9). From then, individuals will be limited to withdrawing 20,000 naira ($44.49) daily, down from the current limit of 150,000 naira ($333.68).

The country is also in the process of removing old banknotes from circulation by the end of the month.

Championed by the governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, the Naira redesign has been proposed as a way to prevent people from hoarding cash for illicit purposes and as a means of controlling inflation. However, the policy has divided opinion.

Two days after the CBN announced the redesign in October, the naira suffered a historic crash, following what has already been a turbulent year for the currency. Shortly after that, the International Monetary Fund (IMF) urged caution as the central bank implements the policy.

With nearly every political party taking a stance on the issue and Nigeria about to kick off its election season, the role of cash in the economy has become a hot political topic.

Proponents of the central bank’s efforts to reduce the weight of the cash economy say it is necessary to tackle corruption and stabilize the naira’s value on foreign exchange markets.

Critics, on the other hand, argue that the current approach is too aggressive and disproportionately affects small businesses and society’s poorest, who are most reliant on a functioning cash system and don’t necessarily have access to alternative means of payment.

PYMNTS

Video - New currency in Nigeria to affect small businesses according to World Bank