Nigeria’s central bank eased rules on international money transfers, taking another step in freeing up its volatile foreign-exchange market to attract billions of dollars being sent home by citizens living abroad.
International Money Transfer Operators, also known as IMTOs, can now quote the naira exchange rate against the dollar “based on the prevailing market rates at the Nigerian Foreign Exchange Market on a willing seller, willing buyer basis,” the central bank said in a memo late Wednesday.
That scraps a previous cap on such transactions limiting the exchange rate to plus or minus 2.5% of the previous day’s closing rate in the official market.
The new rule will enable IMTOs to better compete with rates offered in Nigeria’s unofficial currency market, where operators have typically offered more attractive rates.
The World Bank estimates that Nigerians living abroad remitted $20.1 billion during 2022. But because many of the transactions are conducted through the so-called parallel market, the dollars don’t enter the official foreign-exchange market, where dollar scarcity has been a persistent problem contributing to volatility and naira weakness.
The latest step from the central bank is part of a wider push to step away from managing the currency and unifying the official and unofficial markets to spur investor inflows.
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