Central Bank of Nigeria Lifts Caps on Naira Payout Rates to Boost Forex Market
The Central Bank of Nigeria made a significant announcement on Jan. 31, removing caps on naira payout rates for international money transfer operators (IMTOs) in a bid to liberalize the foreign exchange market further.
Previously, IMTOs were restricted to quoting rates within 2.5% of the previous day’s exchange rate. This adjustment, surpassing a CBN circular from Sept. 13, 2023, now allows IMTOs to offer payout rates based on prevailing exchange rates. The decision responds to ongoing discussions regarding the naira’s stability and value.
Nigerian commentators suggest the previous caps were intended to prevent rapid depreciation but inadvertently widened the gap between parallel and official exchange rates, prompting increased dollar inflows into the parallel market. Consequently, the naira fell to new lows against the dollar, yet reports indicate an over 8% surge on Feb. 1, possibly linked to the removal of these limits, despite reports of licensed forex dealers planning to halt operations.
Clever Robot News Desk 6th February 2024