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.
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.
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.
- 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.
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.