Good News for Naira as IMTOs Receive Highest Dollar Inflow in 6 Years
- Through IMTOs, dollar inflows into Nigeria reached a level not seen in at least six years
- Dollar inflows rose by 39% in the first three months of the year, from $771 million in 2023 to $1.07 billion
- Analysts attributed this to the removal of exchange rate barrier anymore as there are more IMTOs
Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.
As a result of the Central Bank of Nigeria's (CBN) recent reforms, dollar inflows into Nigeria through International Money Transfer Operators (IMTOs) rose to the greatest level in at least six years.
Source: Getty Images
According to a BusinessDay examination of statistics from the CBN's most recent quarterly statistical bulletin, dollar inflows increased from $771 million in 2023 to $1.07 billion in the first three months of this year, a 39% increase.
Moreover, it increased from $965.3 million in Q4 on a quarter-over-quarter basis.
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Given that foreign dollar inflows, which are essentially large-scale remittances from the diaspora, are a significant source of foreign exchange, analysts claim that this circumstance is alleviating the difficulties with foreign exchange liquidity for the most populous country in Africa.
Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), said,
“The rise in remittance inflow in the first quarter of the year can be attributed to the reforms that were implemented by the central bank aimed at attracting more dollar supply through IMTOs and the liberalisation of the FX market,”
“A lot of the barriers have been removed and there is no exchange rate barrier anymore as there are more IMTOs.”
The CBN has eliminated interventionist programs, paid airlines and international investors their foreign exchange backlog, lowered the number of exchange rate windows, and simplified dollar access.
The willing buyer, willing seller paradigm was reinstated and all FX market sectors were combined into the Investors and Exporters window by the apex bank in June 2023.
The FX regime was liberalized as part of efforts to boost the economy, which caused the naira to devalue significantly.
The currency depreciated from N463.38/$(June 2023) to N1,596.92 as of July 19, 2024. At the parallel market, the naira depreciated to N1,580/$ from 762/$ as of Monday.
CBN approves 14 new IMTOs
Legit.ng reported that the Central Bank of Nigeria has granted preliminary approval to fourteen more new foreign money transfer companies.
IMTOs provide cross-border fund transfer services to beneficiaries in Nigeria for people and organizations who live outside.
In theory, approval is the acceptance of a proposal under certain conditions, such as fulfilling additional requirements for ultimate authorization
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Source: Legit.ng
