New data shows that Nigeria’s currency rebounded 10% from its July record low of N710/dollar. After initially blaming speculators, the Central Bank of Nigeria has said importers who fail to remit forex earnings may be contributing to the naira’s depreciation.
The Nigerian currency, less than two weeks after its plunge to an all time low, recovered on the parallel market against the U.S. Dollar and traded at N640 per USD on August 3. This rebound represents a recovery of approximately 10% from the currency’s late July low of over N710 for every dollar.
According to a Businessday report, the increased supply of dollars, as well as the cooling demand for the greenback, had contributed to the naira’s rebound. However, before the currency’s recovery, the naira’s rapid depreciation had prompted the country’s lawmakers to seek answers from Central Bank of Nigeria (CBN) governor Godwin Emefiele.
During his appearance before the lawmakers, Emefiele, who had previously blamed speculators for causing the currency’s slide, reportedly claimed that the Nigerian National Petroleum Company (NNPC)’s failure to remit funds into the foreign reserve had also contributed to the naira’s plunge. Local reports have indicated that officials at the NNPC refute the CBN governor’s claims.
Egboagwu Ezulu is the CBN’s deputy director for banking and services. He was quoted as saying that he has attacked importers who he claims are dumping their foreign currency revenues offshore. He claimed:
FX are available for us [forex]We were instructed to return them after they had been taken out of the country. FX is not a problem if Nigerians bring it back. It is difficult for businesses and individuals to do right.
Ezulu claimed that the CBN introduced an incentive called RT200 to promote the repatriation back to Nigeria of foreign currency earnings. The CBN deputy director stated that billions of dollars are being exported from the country. Ezulu said that when the economy is smuggled out with billions of dollars, it inevitably results in increased pressure on its currency.
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