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Nigeria eases rules on diaspora remittances to boost FX liquidity

Published 30/11/2020, 22:57
© Reuters.

ABUJA, Nov 30 (Reuters) - Nigeria hopes to attract more
remittances from its diaspora to boost foreign currency
liquidity after the central bank issued a circular on Monday
lifting rules that had restricted inflows.
Rising dollar demand has been putting pressure on the naira.
Importers with obligations have scrambled for hard currency,
while providers of foreign exchange, such as offshore investors,
have exited after COVID-19 triggered an oil price crash.
The bank said diaspora remittances would be paid in cash in
U.S. dollars or into a domiciliary (foreign-currency) account at
market rates. In the past, remittances could be paid in naira
and the central bank had restricted domiciliary account usage.
In the circular, the bank sought to lure more remittances, a
major source of dollar inflow after oil. The bank said the
changes were needed to deepen the currency market and provide
more liquidity.
Nigeria is the world's fifth-biggest destination for
international remittances, with 5 million Nigerians living
abroad sending money back to relatives, according to Western
Union. PricewaterhouseCoopers estimated that diaspora flows into
Nigeria totalled $23.63 billion in 2018, representing 6.1% of
GDP.
The naira hit 500 to the dollar on the black market on
Monday to fall to a 3-1/2-year low as dollar scarcity worsened,
widening the gap with the official market. The central bank weakened the naira by 1.5% to 390 per
dollar for exchange bureaux, closer to the over-the-counter spot
market, quoted by investors and importers, to ease pressure on
the currency.

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