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.

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Terence Zimwara

Terence Zimwara is a Zimbabwe award-winning journalist, author and writer. He has written extensively about the economic troubles of some African countries as well as how digital currencies can provide Africans with an escape route.