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CBN Introduces ‘Naira-4-Dollar Scheme’ for Diaspora Remittances

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The Central Bank of Nigeria (CBN) has introduced what it calls “Naira-4-Dollar Scheme” for Diaspora remittances, which offers recipients of Diaspora remittances through CBN’s International Money Transfer Operators (IMTOs) to be paid N5 for every $1 received as remittance inflow.

The scheme takes effect from March 8, 2021, and ends on May 8, 2021.

This was disclosed by CBN in a circular issued to all Deposit Money Banks and IMTO.

The memo was dated March 5, 2021, and signed by the Director, Trade and Exchange Department, A.S Jibrin, and it reads in part:

“In an effort to sustain the encouraging increase in inflows of Diaspora remittances into the country, the Central Bank of Nigeria (CBN) hereby announces the introduction of the “CBN Naira-4-Dollar Scheme”, an incentive for senders and recipients of international Money Transfers.

“Accordingly, all recipients of Diaspora remittances through CBN licensed IMTOs shall henceforth be paid N5 for every USD1 received as remittance inflow.

“In light of this, the CBN shall, through commercial banks, pay to remittance recipients the incentive of N5 for every USD1 remitted by sender and collected by designated beneficiary.

“This incentive is to be paid to recipients whether they choose to collect the USD as cash across the counter in a bank or transfer (the) same into their domiciliary account.

“In effect, a typical recipient of Diaspora remittances will, at the point of collection, receive not only the USD sent from abroad but also the additional N5 per USD received.

“Please note, having discussed with banks and IMTOs, the scheme takes effect from Monday 8 March 2021 and ends on Saturday 08 May 2021.

The initiative is also being supported by commercial banks as we have seen some banks also advertise it to their customers.

It also appears to be an attempt by the CBN to compete with the black market and other unofficial avenues of receiving forex.

Further explanation:

In what appears to be an attempt to incentivize dollar remittances by all means possible, the Central Bank of Nigeria (CBN) released a circular to Deposit Money Banks (DMBs), International Money Transfer Operators (IMTO), and the General Public, advising that remittances paid into a bank account will attract an additional credit alert for every USD$1 received!

The CBN will facilitate a special additional credit alert of N5 for every USD$1 received. In other words,

if someone sends you $10,000, you get an additional special credit alert for N50,000.

If someone sends you $100,000, you get an additional special credit alert for N500,000.

▪︎Who is eligible?

To be eligible, the Diaspora remittances need to be processed and received from one of the registered IMTOs and funds received into a Bank account operated by the DMBs. (So, if you are receiving funds via Crypto sorry you are not eligible).

Additionally, the circular says this “incentive runs from March 8. 2021 to Saturday May 8, 2021″. So, if you have plans to receive dollars, you can plan accordingly.

The circular is not clear how exactly the commercial banks will establish which account to pay the extra special credits into.

Although that may be a question that the Diaspora funds recipients will need to ask their DMB accounts officers to clarify for them.

▪︎How will this be funded?

The circular notes that the “CBN shall through commercial banks, pay to recipients the N5 incentive for every USD$1”. In other words, it is the CBN funding the cost of this special extra credit.

One would argue that given the costs of alternative incentives to attract dollars such as the special OMO window for FPI, this may be a cheaper alternative for the CBN.

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Economy

Naira Makes More Recovery, Sells at N1,453/$1

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The Naira continued its appreciation at the official market on Thursday, March 21, 2024 to close at N1,453.28/$1, according to data from the Nigerian Autonomous Foreign Exchange Market (NAFEM).

This represents an appreciation of N39.33 when compared to the N1,492.61/$1 it closed on Wednesday, March 20, 2024.

The intraday high was N1,598/$1, while the intraday low was N1,300/$1, representing a wide spread of N298/$1.

Similarly, the Naira appreciated against the dollar at the parallel window to trade at N1,500/$1, this represents an appreciation of N20.00 as against the N1,520 /$1 it traded the previous day.

The Naira also appreciated slightly against the British Pound to trade at N2,000/£1 as against the previous trading day’s price of N2,020/£1 representing a gain of N20 for the local currency.

The Canadian dollar, however, closed flat against the naira to trade at N1,270/CA$1 same as the N1,270/CA$1 it traded the previous day representing a decline of N20 in the local currency.

The Naira gained N30 against the Euro to trade at N1,670/€1 as against the previous closing price of N1,700/€1.

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Economy

Naira Gains Against Dollar, Trades at N1,603/$1

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The Naira, Tuesday continued its recovery against the American dollar as it traded at N1,603.38/$1, data from the Nigerian Autonomous Foreign Exchange Market (NAFEM) window has shown.

This represents a gain of N15.48 when compared to the N1,617.96/$1 it closed on, on Monday, March 11, 2024.

The intraday high was N1,637/$1, while the intraday low was N1,425.35/$1, representing a lean spread of N211.65/$1.

Meanwhile, the Naira gained N12 against the dollar at the parallel market as the local currency appreciated to N1,603/$1 as against the N1,615 /$1 it traded the previous day. As it stands, the naira is trading at the same rate at both official and parallel windows.

The Naira, however, slumped against the British Pound to trade at N2,050/£1 as against the previous trading day’s price of N2,030/£1 representing a loss of N20 for the local currency.

After about two weeks of closing flat against the Canadian dollar, the naira slumped massively to trade at N1,300/CA$1 on Tuesday, representing a decline of N150 when compared to the N1,150/CA$1 it traded the previous day.

The Naira lost N35 against the Euro to trade at N1,740/€1 as against the previous closing price of N1,705/€1 representing a loss of N35 for the local currency.

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Economy

Binance to Close Shop in Nigeria, Stops Transaction, Trading in Naira

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By Reuters – Binance will stop all transactions and trading in Nigeria’s local currency after March 8 amid a country-wide crackdown on crypto exchanges that have been blamed by authorities for feeding a black market for foreign exchange.

It will stop supporting withdrawals after Friday and any remaining balances in Nigerian Naira will be automatically converted into Tether – a stablecoin whose value is pegged to the U.S. dollar.

Last week, Nigerian authorities detained two Binance senior executives on undisclosed charges as part of the crackdown.

They were still in custody, their local lawyer said before a parliamentary committee on Monday.

Source: Reuters

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