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.
Naira Depreciation
Less than two weeks after it tumbled to a new all-time low, the
Nigerian currency recovered against the U.S. 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 Businessday 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.
