Market News

Naira rallies at N1,515 to dollar in parallel market - THE NATION

JULY 10, 2024

The naira yesterday made marginal gain of N15 to dollar, closing at N1,515 to dollar at the parallel market.

The local currency, which closed last week at N1,530 to dollar came back stronger following increased dollar inflows to the economy.

It however, depreciated 0.94 per cent to close at N1,5023.85 at the Nigerian Autonomous Foreign Exchange Market (NAFEM)- the official market.

The status of the naira has been improving in recent months following the settlement of over $1.3 billion FX forwards contracts by the Central Bank of Nigeria (CBN).

Analysts at Rand Merchant Bank in Lagos, disclosed that with the settlement, outstanding FX forwards contract left unpaid, between now and December is estimated at $198 million.

The reduced volume of unsettled FX contract will cut FX pressure against the naira, helping the local currency to rebound.

The CBN has continued to take certain steps to boost dollar liquidity and support naira recovery at both official and parallel markets.

In a major push to boost forex availability in the economy, the Central Bank of Nigeria (CBN) recently authorised International Oil Companies (IOCs) operating in Nigeria to sale 50 per cent of bulk FX proceeds at domestic forex market.

A circular to authorised dealer banks released last month and signed by CBN director, Trade & Exchange Department, Hassan Mahmud, said earlier directive to the IOCs to send  50 per cent of the FX proceeds to their home countries at once, and the other 50 per cent after 90 days stays.

However, the balance 50 per cent of the repatriated funds could now be used to settle financial obligations locally, whenever required, during the prescribed 90-day period.

The apex bank further directed that all authorised dealers to pay Personal and Business Travel, allowances (PTA/BTA) to their customers through electronic channels only, including debit or credit cards instead of cash.

“In line with the Bank’s commitment to ensure transparency and stability in the foreign exchange market and avoid foreign exchange malpractices, All Authorized Dealer Banks shall henceforth effect payout of PTA/BTA through electronic channels only, including debit or credit cards. For the avoidance of doubt, payment of PTA/BTA by cash is no longer permitted,” the bank said.

Importers are finding it increasingly difficult to secure the necessary funds from the official FX market and black market.

Legitimate needs driving the demand include Form A applications for Business Travel Allowance (BTA), Personal Travel Allowance (PTA), school fees, and medical fees. Small and Medium Enterprises (SMEs) are also grappling with the scarcity, as highlighted by the use of Form Q.


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