Nigeria Limits Dollar Repatriation by Oil Firms to Support Naira

Nigeria’s central bank restricted foreign-currency transfers by international oil companies as it seeks to boost dollar liquidity in the domestic market and help stabilize the plunging naira.

Going forward، international oil companies may only remit half their export earnings to their parent companies، with the balance to be repatriated 90 days from the date of inflow of the export proceeds، the bank said in a circular dated Wednesday.

Easy access to export proceeds

“While the Central Bank of Nigeria strongly supports the need for international oil companies to have easy access to their export proceeds، particularly to meet their offshore obligations، this must be done with minimal negative impact on liquidity،” it said. “All banks are required to comply with this circular.”

The requirement is the latest of several steps taken by the central bank since January to boost market liquidity، pricing and investor confidence، after the naira lost about 50% of its value last year. While the measures have moderated volatility and increased foreign-exchange inflows into Nigeria، the currency has continued to depreciate.

Pressure on the naira

Dollar sales at the official foreign currency market declined by more than a half on Wednesday to $117.9 million، bringing pressure to bear on the naira، which weakened 1.5% to 1،503 per dollar، according to FMDQ، which compiles the data for the West African nation.

On the parallel market — where most Nigerians who can’t access the official market are forced to obtain dollars at a premium — it changed hands on Thursday at 1،615 per dollar from 1،605 the previous day، according to Abubakar Mohammed، chief executive of Forward Marketing Bureau de Change Ltd. in Lagos.