After touching a new all-time low of N710 per dollar in late July, a new report says the Nigerian currency has rebounded by as much as 10%. 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.
Less than two weeks after it tumbled to a new all-time low, the Nigerian currency recovered against the US dollar on the parallel market and went to close trading at N640 per dollar 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 business day 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. However, some local reports have quoted officials from the NNPC rejecting the claims made by the CBN governor.
Meanwhile, Egboagwu Ezulu, the CBN deputy director for banking services, is quoted in another report attacking importers whom he accuses of dumping foreign exchange revenues offshore. He said:
We are taking FX [forex] out of this country and dumping offshore; when we were told to bring them back. If Nigerians are bringing back FX, we would not be talking about the challenges of FX. There is a challenge for individuals and businesses to do the right thing.
Ezulu also argued that the CBN had introduced an incentive known as RT200 as a way to encourage the repatriation of foreign currency earnings back to Nigeria. However, the CBN deputy director claimed the central bank is seeing billions of dollars being exported out of the country. According to Ezulu, when billions of dollars are spirited out of the economy, this inevitably leads to increased pressure on the naira.
Register your email here to get a weekly update on African news sent to your inbox:
What are your thoughts on this story? Let us know what you think in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.