Rapportera: Nigerian Central Bank Incentive Scheme Failed to Halt Naira Depreciation

The Central Bank of Nigeria (CBN)’s attempt to incentivize the country’s forex market through the so-called “Naira for Dollar” scheme has failed. This is evidenced by the local currency’s plunge of more than 25% since the launch of the incentive scheme in March 2021.

Naira Depreciation

The CBN’s scheme that encourages recipients of cross-border remittances to cash out via formal channels failed to incentivize the forex market and has therefore not achieved the bank’s goal of halting the naira’s depreciation, a report has said.

According to one Rapportera in a local news site, Blueprint, since the launch of the Naira for Dollar scheme more than 13 months ago, the naira’s exchange rate versus the U.S. dollar fell by more than 25%. At the time of writing, the naira-to-dollar exchange on the parallel market is 612 naira for every dollar. The official exchange rate has remained at 415 naira for every dollar.

As previously reported by Bitcoin-Tidings.com News, the CBN launched the incentive scheme more than a month after it directed financial institutions to block crypto entities from the banking ecosystem.

At the time, the CBN’s goal was to lure Nigerians in the diaspora who were reportedly sending remittances via alternative channels, which use the black market exchange rate. By directing cross-border remittances to official channels, the CBN would be able to increase the amount of foreign currency that flows into its coffers. Large foreign currency reserves in turn would be used to support the naira. In March, an economist with the central bank declared that the scheme had achieved its objective and was thus a success.

Se även  ETH Mixer Tornado Cash Reveals Blocking OFAC Sanctioned Ethereum Addresses via Chainalysis Oracle Contract

Indirect Naira Devaluation

Nevertheless, some unnamed pundits quoted in the report insist the scheme alone cannot undo the pricing anomalies caused by inconsistent policies. Some experts and organizations even view the incentive scheme as a form of devaluation of the naira. For instance, Cowry Asset Management is quoted in Blueprint remarking on how the scheme may have sent the wrong signals to the market.

“However, we feel that the CBN’s Naira for Dollar Scheme appears to be another form of Naira depreciation which may have sent the wrong signal to the forex market,” the asset management firm said.

Taggar i denna berättelse

What are your thoughts on this story? Let us know what you think in the comments section below.

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.














Bildkrediter: Shutterstock, Pixabay, Wiki Commons

varning: Den här artikeln är endast i informationssyfte. Det är inte ett direkt erbjudande eller uppmaning till ett erbjudande att köpa eller sälja, eller en rekommendation eller rekommendation av någon produkt, tjänster, eller företag. Bitcoin-Tidings.com ger inte investeringar, beskatta, Rättslig, eller redovisningsrådgivning. Varken företaget eller författaren ansvarar, direkt eller indirekt, för alla skador eller förluster som orsakas eller påstås vara orsakade av eller i samband med användningen av eller tilliten till något innehåll, varor eller tjänster som nämns i denna artikel.

Läsa varning