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Home Markets Currencies

New CBN Circular: CBN confirms only Banks can pay IMTO dollars

Chidi Emenike by Chidi Emenike
December 2, 2020
in Currencies, Spotlight
Forex: U.S dollar gains strength, global geopolitical climate worsens

Notes from a seized haul of $7.16 million in counterfeit hundred-dollar bills are pictured in Battambang September 30, 2014. Cambodian police seized the fake notes on September 19 near the border with Thailand, the largest seizure of fake U.S. notes in Southeast Asia for about a decade and the biggest ever in Cambodia. Picture taken September 30, 2014. To match CAMBODIA-CRIME/COUNTERFEIT REUTERS/Andrew RC Marshall (CAMBODIA - Tags: CRIME LAW BUSINESS)

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The Central Bank of Nigeria (CBN) has issued an update to its recent circular on the management of remittances from diaspora Nigerians. In a circular posted on its website, the apex bank instructed banks to transfer all diaspora remittances to the domiciliary accounts of the beneficiaries or pay the customers in foreign currency.

READ: MFBs, DMBs, others get new lending limit directive from CBN

On payment of foreign transfers

  • It also clarified that the choice of how the money should be paid, whether transfer or dollar cash withdrawal is the choice of the beneficiary of the remittance.
  • The circular also instructed the IMTOs to ensure the foreign currency is deposited into their corresponding deposit money bank accounts. It also confirmed banks are to pay the dollars to the beneficiaries either via transfers to domiciliary accounts or in cash.

READ: Explained: The variables that took Nigeria’s foreign exchange reserves to $40 billion

In another circular seen by Nairametrics but issued to deposit money banks, the CBN closed all Naira ledger accounts opened specifically for the purpose of receiving IMTO (foreign transfers from diaspora Nigerians) with immediate effect.

What this means: This spew of circulars follows another one issued on Monday by the apex bank which effectively instructs banks to pay foreign remittances in dollars and no longer in naira.

READ: ‘Banks lost N15billion to fraud, cyber-crime in 2018’

  • This move has strengthened the exchange rate in the black market with the dollar selling for N470/$1 before weakening again to N480/$1 in the evening of Wednesday.
  • Analysts, including Nairametrics, believe the series of circulars by the central bank is aimed at reducing the disparity between the black market and official I&E windows.
  • According to the theory, if more Nigerians are able to sell their dollars at the rate that they want then this could create more liquidity thus reducing the exchange rate disparity.

READ: Naira crashes to N500/$1 at black market as CBN adjusts exchange rates

What you should know: Before now, inflow through IMTO such as Western Union was paid to beneficiaries in Naira. However, the CBN now wants this payment to be made in dollars.

Related

Tags: Business NewsCBNCentral Bank of NigeriaIMTONigeria News

Comments 3

  1. Ojo Sunday says:
    December 24, 2020 at 8:43 am

    Its Good if they can be paid it in dollar but it affected some people that want to send money to their family or received money but they have to solved the issues quickly so it will not affect those people that using western Union, moneygram and Ria

    Reply
  2. cocotee says:
    January 14, 2021 at 6:19 am

    We that is living in United Kingdom should be coming home with our British pounds in CASH, Nigerian central bank should carry their cross. We work hard over here for our money and nobody should tell us what to do with our money or how we should spend it. Nigeria is in DEEP MESS.

    Reply
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    September 28, 2021 at 7:21 am

    Hello friends fextyhackers.wordpress.com have no issues, there i make my $30000 weeks ago I will also advice you guys to try them and also testify.

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