CBN makes U-turn Orders banks to pay out diaspora remittance in USD
December 8, 2020
CBN makes U-turn Orders banks to pay out diaspora remittances in USD
Diaspora remittance – The Central Bank of Nigeria (CBN) in its commitment to further deepen the foreign exchange market, provide more liquidity,
Create transparency in diaspora remittance administration and finance future stream of investment opportunities for Nigerians in the diaspora has directed Nigerian banks to commence payment of remittances in USD effective November 31st 2020.
Recall in October 2013, the Central Bank of Nigeria mandated banks to pay all inward remittances in Nigerian naira.
This follows a trend where CBN alleged that BDSs purchased and sold huge sums of U.S. dollars with no documentation to show details of the transactions.
Thereby curtailing high influx of dollars which appears to be dollarizing the economy at that time.
This as well was aimed at forestalling the round tripping of foreign exchange purchased at the CBN official window to unauthorized channels.
In a reversal, the apex bank on November 30th 2020 distributed a circular to commercial banks, reiterating the need to return to dollar payment across banks.
Highlights of this decision
The naira has continued to collapse against the USD in a nosedive, the economy is arguably in recession, this too is attributed to shortage of the USD in circulation.
The USD has become a scarce resources, thus the law of demand and supply applies.
It’s apparently right that USD price is determined by the market forces of demand and supply sentiment, to this end, to help the naira resuscitate against the USD, the economy ought to be dollarized.
The easiest and fastest approach to introduce more dollars into the economy to pacify the roaring storm is by paying out remittances in USD than other than the naira.
- If you receive Western union, Money Gram, Ria, World Remit, SHIFT transfers, Transfast etc from abroad, henceforth you must receive such payment in USD.
- Where such funds cannot be paid out across the counter, your personal domiciliary account shall be credited with value
- The bank no longer determines the exchange rate, your funds will arrive in full settlement.
- There’s going to be more transparency this time in the diaspora remittance administration.
- If you were sent $500 USD, the bank will now pay out $500 USD, unlike when the bank pays you at about N353 per $1, while USD sales for as high as N485 per $1. It then stands that you are taking your $500 USD to the market for a decent exchange rate.
- There comes a sigh of relief from the beneficiaries of the international money transfers.
Read also: How to receive Western Union on ATM
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