Currencies
CBN issues modalities for payout of diaspora remittances in dollars
The new circular explains who diaspora remittances are to be paid to beneficiaries in Nigeria only in foreign currency and not naira.

Published
1 month agoon

The Central Bank of Nigeria (CBN) has issued a circular setting out the Modalities for Payout of Diaspora Remittances.
The apex bank has frowned at activities of some International Money Transfer Operators (IMTOs) and unlicensed companies who continue to facilitate diaspora remittances into the country in Naira instead of dollars.
The apex bank’s reaction follows the contravention of its earlier directive that all diaspora remittances must be paid to the beneficiaries in dollars.
This disclosure was contained in a circular titled, ‘Modalities for Payout of Diaspora Remittances’, issued by the CBN on Friday, January 22, 2021, and signed by its Director Trade and Exchange Department, Dr O.S. Nnaji.
READ: CBN revokes licenses of 7 Payment Service Providers
What the CBN is saying
The CBN in its circular said, ‘’Further to our circular titled ‘Receipt of Diaspora Remittances: Additional Operational Guidelines’, it has come to our notice that some IMTOs and unlicensed companies continue to facilitate diaspora remittances into the country in Naira, “in clear contravention of the Central Bank of Nigeria directive that all remittances be paid to beneficiaries in dollars.’’
READ: More pressure on the naira as Diaspora remittances to drop by 20%
For the avoidance of doubt, the Central Bank of Nigeria further clarifies as follows;
- Only licensed IMTOs are permitted to carry on the business of facilitating diaspora remittances into Nigeria;
- All diaspora remittances must be received by beneficiaries in foreign currency only (cash and /or transfers to domiciliary accounts or recipients);
- IMTOs are not permitted, under any circumstances, to disburse diaspora remittances in Naira (either in cash or by electronic transfers), be it through remittance settlement accounts (which had been earlier directed to be closed), third party accounts or via any other payment platforms within and/or around the Nigerian financial system.’’
READ: Nigeria’s forex devaluation timeline – 2020
The apex bank in the circular said that the measures were intended to promote transparency, grow diaspora remittances and significantly improve foreign exchange inflows into Nigeria.
The CBN warned that strict sanctions, including withdrawal of operating licenses, shall be imposed on any individuals and/or institutions found to be aiding, abetting or directly contravening these guidelines.
It went further to say that it shall not hesitate to authorize the closure of the accounts of unlicensed operators in Nigerian banks, including being barred from accessing banking services in Nigeria.
It promised continued monitoring of developments in this regard, adding that it would also issue further guidance as appropriate.
READ: Continuous increase in inflation rate may weaken economy – CBN report
What this means
With the insistence of the apex bank on its earlier directive, it means that Nigerians living in the diaspora can transfer foreign currency to their relatives and loved ones in the country, who in turn will withdraw the money in dollar cash and sell it anywhere they so desire in exchange for naira.
It means they can for instance receive foreign transfers such as Western Union or Moneygram, withdraw it in dollars and then sell at the black market rate or anywhere else they want to. This they believe will help to stabilize the exchange rate and discourage hoarding.
READ: UBS warns Bitcoins could disappear like Myspace
What you should know
- It can be recalled that the CBN, had in November 2020, amended the procedure for the receipt of diaspora remittances and insisted that it must be paid in dollars to the beneficiaries, in an apparent and frantic attempt to improve liquidity in the forex market and reduce the disparity between the black market and the official window.
- Also in an additional guideline for diaspora remittances, the CBN barred IMTOs from sending money to Mobile Money Operators and also stopped the integration of payment services providers to IMTO accounts. It also stopped switches and processors from getting involved in foreign remittances.
Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected].com.


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Currencies
Naira gains at NAFEX window as oil prices rally back
The exchange rate between the naira and the US Dollar closed at N411/$1, at the Investors and Exporters window on Wednesday.

Published
16 hours agoon
March 4, 2021
The exchange rate between the naira and the US Dollar closed at N411/$1, at the Investors and Exporters window on Wednesday.
Naira appreciated marginally against the US Dollar on Wednesday as it closed at N411 to a dollar at the NAFEX window, representing a 0.15% gain when compared to N411.63 recorded on the previous trading day. This is as oil prices rallied back at the global market.
Meanwhile, the naira remained stable against the dollar to close at N480/$1 on Wednesday, March 3, 2021. This was the same rate that it closed on the previous trading day.
The forex turnover at the Investor and Exporters (I&E) window dropped by 44% from $59.17 million recorded on Tuesday to $33.15 million on Wednesday, March 3, 2021.
Trading at the official NAFEX window
The Naira appreciated against the US Dollar at the Investors and Exporters window on Wednesday to close at N411/$1. This represents a 63 kobo gain when compared to N411.63 recorded on the previous trading day.
- The opening indicative rate closed at N410.66 to a dollar on Wednesday. This represents a 55 kobo drop when compared to N410.11/$1 recorded on Tuesday.
- Also, an exchange rate of N415 to a dollar was the highest rate during intra-day trading before it closed at N411/$1. It also sold for as low as N390/$1 during intra-day trading.
- Forex turnover at the Investor and Exporters (I&E) window dropped by 43.97% on Wednesday, March 3, 2021.
- According to the data tracked by Nairametrics from FMDQ, forex turnover declined from $59.17 million recorded on Tuesday, March 2, 2021, to $33.15 million on Wednesday, March 3, 2021.
Cryptocurrency watch
The world’s largest cryptocurrency, Bitcoin rallied back above $50,000 on Wednesday to close above $51,000 compared to its previous closing of $48,814.26 as it recovers from one of the most severe dips in its history.
- The cryptocurrency rose by as much as 11% as bullish momentum returned after last week’s selloff, reaching the highest level in 2 weeks.
- The cryptocurrency has been volatile with prices plunging 21% last week before recovering with the earlier broad bounce back in global equities. On a technical basis, the GTI Global Strength Indicator, which detects trend fluctuations, has begun to curl upward, suggesting a bullish move for Bitcoin.
- Bitcoin was trading below $44,000 earlier this week, having hit an all-time high the week before above $58,000. Its rebound suggest the third great price rally in its history may still be underway
- Meanwhile, Ether ETH=BTSP, the coin linked to the Ethereum blockchain network, dropped by 6% to $1,612.4 on Wednesday.
Oil price decline
Brent Crude oil rose by $1.06 on Wednesday to close at $64.07 representing a 1.7% increase when compared to $63.01 recorded on the previous trading day.
- Oil prices rose on Wednesday, following reports that the OPEC+ group could be weighing the possibility not to increase collective oil production from April as widely expected and despite a shockingly large crude build (the largest on record) as estimated on Wednesday by the EIA, oil prices were still holding strong.
- The OPEC+ alliance is considering keeping the oil production cuts from March in place in April as well, in view of the still-fragile global demand recovery.
- Also, a US government report showed a record drop in domestic fuel inventories from the aftermath of a deep freeze that shuttered refineries in several states.
- WTI Crude closed at $60.91 (0.60%), OPEC Basket $61.97 (-3.53%), Bonny Light $63.11 (-0.64%), and Natural Gas $2,800 (+0.57%).
External reserve dips to lowest in two months
Nigeria’s external reserve continued its decline as it dropped by 0.12% to $34.957 billion as of March 2, 2021, compared to $34.998 billion recorded as of March 1, 2021.
- This represents the lowest external reserve position Nigeria has recorded in over two-months when it stood at $34.98 billion as of 24, December 2020.
- It is also worth noting that Nigeria lost over $1.2 billion in external reserves in the month of February.
- The decline in Nigeria’s external reserve has persisted in the month of February, despite rallying oil prices in the month. This is a cause for worry, as Nigeria will hope to boost its reserve in order to meet up with its accumulated needs, hindered by the crash in oil prices earlier in 2020.
Currencies
Why external reserves is falling despite a rise in oil prices
Increased oil prices seem not to have stopped the further slide in Nigeria’s foreign reserves.

Published
1 day agoon
March 3, 2021
Nigeria’s external reserve declined from $36.3 billion as of January 29, 2021, to $34.998 billion as of March 1, 2021, losing about $1.4 billion in just a month.
The rapid drop in the country’s external reserve is occurring despite the increase of Brent crude to over $66 per barrel as of February 24, 2021, from about $51 per barrel that it closed with on January 4, 2021.
Some analysts had attributed a couple of likely reasons for this drop. This includes the CBN intervention in the forex market to stabilize the exchange rate, low foreign inflows into the country, some CBN forex policies which discourage foreign investors.
The President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe, during his chat with Nairametrics, said that the decline in Nigeria’s external reserve despite the recent increase in oil prices was due to supply shocks and shortages of foreign exchange due to drop of forex inflow from various sources.
Gwadebe said, ‘’You know we have a lot of supply shocks and shortages even before the appreciation of the crude oil prices, we just came out of recession with less than even 0.1%. We know the prices of crude oil, the demand came down throughout the Covid-19 period, even now with the new variant. So the IMTOs inflow has reduced drastically, export proceeds have reduced drastically, the I & E window has also gone down drastically. You know you can appreciate what is happening at the I & E window, their trade transactions sometimes hover up to N420/$1.’’
Read Also: CBN Governor confirms exchange rate unification plans
On why increased oil prices have not stopped the further slide in the reserves, the ABCON President said, ‘’Completely all the sources coming have dried up, the oil prices dried up, IMTO window dried up. We are talking about a month, and these are contracts that have been closed for 3, 6 months delivery, we are just witnessing it. It will take time, it’s a very good buffer, no doubt we rely on it heavily for 90% of our foreign exchange supply. So if we have that improvement, it will give the CBN the muscle, the wherewithal to continue to support the local market. It will give CBN the muscle to make any speculation, check any hoarding.”
‘’Now that we have prospects in oil prices definitely that news, that coming in of new inflows will give the CBN the muscle to make any speculation, to checkmate hoarding, because they are in I & E window, they are in BDC window, they are in a lot of windows, so they can come up with liquidity. Definitely, it is going to. And we have seen the impact because the way it was going before this increase in crude oil prices, it was worrisome and if you look at it now it has remained stable, the highest it went is N480 for the parallel market and its always trending down. There is that stability just for that news, so you can imagine when we start receiving the liquid grill just imagine what it will become just like people have predicted and analyzed N430, N450/$1 is what we might be looking at by the end of the year,’’ he added.
On his part, a treasury and financial analyst, Odinaka Nwokonkwo, while giving reasons why it should be that way, pointed to CBN obligations. He said the apex bank paid Eurobond maturities in January or thereabout, and did FX swap with local and international counterparts which may have matured and needed to be paid down.
He said, ‘’There is a Eurobond maturity that CBN funded for, so that would also reduce the reserves, then another thing is when you look at, CBN has been intervening in the forex market. So on that space, you are seeing retail, you are seeing SME and invisibles intervention weekly. Retail is biweekly and SME and invisible about $100 million weekly. So sometimes CBN has bilateral transactions with international institutions and local banks where they take their FX and basically give them treasury bills, so that also is part of the reserves.
Read Also: Oil prices break above $65 a barrel, passing 13-month high
‘’So if some of those swaps have matured and CBN needs to pay down these bonds, they will also see a reduction. So it’s a combination of a lot of things. And also what is the volume of sales of the oil, are we really selling more, is the quantity we are selling is the same as what we are selling before. The demand might drop a little bit because some countries also have a second lockdown.’’
Nwokonkwo also believes that in the next quarter, there might see an accretion because some of those obligations may not be there.
While pointing out that the accretion rate is slower than the debit rate, he said the oil price at $65 is not a significant increase compared to CBN FX obligations.
These external reserve figures and swings point to two things: Nigeria seems to be overestimating the power of it oil to keep the country running and the enduring reality it needs to find other ways of earning foreign exchange.
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dsctrack
January 23, 2021 at 10:31 pm
u said no more dollar remittance now it has backfired. tell me these guy are not confused with so much tyrant policies.terribly clueless,half baked, primary school economic knowledge.na wa o
Rabiu Hakeem
January 24, 2021 at 3:28 pm
This thing is affecting me, my friend from Israel can’t send money to me because they don’t use dollars please allow international money transfer in naira remittance please 🙏 because is not all the Nigeria citizen is in favour by this new dollars remittance
Esther Naya
January 24, 2021 at 10:47 am
The world is opening up and using technology to make things easier. Nigeria is making policies that add layers of difficulty to its citizens. Proper half baked.
Raphael
January 24, 2021 at 2:40 pm
Nigerians in diaspora will be stupid to not use their money as leverage to force good governance. They need to save more of their money and only bring it to Nigeria only and if a responsible government is in place. Granted they support school fees and medical bills of relative that can’t wait but what then is government doing for education and health. Its like throwing money into air or water in a basket. Let them force good governance, starve the stealing politicians and negotiate diaspora voting, security for property and lives. Why spend money to support a system that doesn’t let your voice be heard, won’t guarantee your safety when you come home and dosen’t care about your needs.increasingly disaporans are being singled out as abandoners instead of the heroes they are.
Irabor Kingsley Ehis
January 24, 2021 at 6:33 pm
We have many Nigerians in the Diaspora who needed financial help from relatives at home, business Nigerians and students who are in the need of money abroad, please tell us how this issue transfer abroad can be solved.