In response to the recent historic fall of the national currency, the Federal Government is reportedly considering a bold move known as “Operation Rescue Naira.” The plan involves converting around $30 billion in foreign currencies held in domiciliary accounts of individuals and corporate entities to naira, aiming to stabilize the struggling Nigerian currency.
The proposal comes in the wake of the naira’s 24% depreciation against the dollar earlier this week, marking its worst performance to date. The move is seen as an effort by the government to counter forex scarcity and prevent individuals from hoarding foreign currencies, which is believed to exacerbate the challenges faced by the naira.
Top Presidency sources suggest that the issue of dollar scarcity is primarily affecting the elite and occurs notably at the beginning and end of each month, coinciding with FAAC allocations to governors. The government aims to discourage the practice of keeping dollars in domiciliary accounts, asserting that such accounts should only be maintained by those with legitimate foreign currency earnings.
While acknowledging the potential challenges of placing a lien on domiciliary accounts, the government is determined to take action to address the economic issue. The conversion rate from foreign currencies to naira will be determined by the Central Bank of Nigeria (CBN). However, concerns are raised about the practicality of implementing such a measure.
Meanwhile, key figures including the Minister of Finance, the Chairman of the Economic and Financial Crimes Commission (EFCC), and the Governor of the Central Bank of Nigeria have met to discuss strategies for enhancing the efficiency of the financial system and stabilizing the naira. The EFCC chairman expressed support for initiatives aimed at improving the integrity of financial regulations.
In a related development, the CBN has issued new guidelines prohibiting banks and fintech companies from operating International Money Transfer Operations (IMTO). Instead, they are allowed to act as agents, with the CBN aiming to regulate IMTOs more closely. The central bank has also increased the minimum share capital requirement for IMTO operators to $1 million.
Despite the challenges, the naira has shown signs of recovery in the past three days, closing the week at N1,435.53/$ after reaching an all-time high of N1,482.57/$ earlier in the week. Market analysts attribute the improvement to the CBN’s directive for banks to sell excess dollar stock, which has boosted liquidity in the foreign exchange market.
The President of the Association of Bureau De Change of Nigeria noted a shift in behavior, stating that Nigerians have stopped buying dollars to hoard due to increased confidence in the CBN’s policy direction. While challenges persist, the government’s proactive measures and the central bank’s interventions aim to stabilize the currency and mitigate the impacts of dollar devaluation.
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