The Nigerian naira weakened by N67 against the US dollar over the past week amid the introduction of a new measure aimed at channeling foreign currency held by some locals into the market.
The official spot rate depreciated to ₦1,666.72 per US dollar from ₦1,600 at the beginning of the week, despite the Central Bank selling $77 million to banks to enhance liquidity. In the parallel market, the naira saw a modest gain of N5 week-over-week, closing at ₦1,730.00, influenced by a slowdown in seasonal foreign exchange demand for year-end imports.
Despite the Central Bank’s foreign exchange auctions to banks and the latest efforts to integrate foreign currencies outside banks into the economy, the naira’s exchange rate remained under pressure.
Last week, the Nigerian government launched an amnesty program designed to encourage individuals to bring foreign exchange held outside banks into the formal market. According to a statement from the Ministry of Finance, participants in the program will not face tax audits, and their assets will not be seized.
Finance Minister Wale Edun stated, “The scheme offers a secure, confidential channel for people to reintegrate their legitimate foreign-currency funds, promoting stability and growth for our nation.” He emphasized that the initiative aims to incorporate foreign currency assets held by Nigerians, both domestically and abroad, into the formal economy through voluntary disclosure, depositing, repatriation, and investment.
“The federal government of Nigeria is pleased to announce the commencement of the Foreign Currency Voluntary Disclosure, Depositing, Repatriation, and Investment Scheme, known as the Disclosure Scheme,” the statement read. This initiative is in line with Executive Order No. 15 of 2023 and the Foreign Currency Disclosure, Deposit, Repatriation, and Investment Scheme Guidelines, 2024, issued by the Honourable Minister of Finance and Coordinating Minister of the Economy on October 25th, 2024.
Minister Edun further explained that the scheme aims to enhance financial security and positively impact the economy by increasing reserves and stabilizing exchange rates. “The Disclosure Scheme is a bold initiative aimed at integrating foreign currency outside the formal financial system into the formal economy. It strengthens transparency and economic resilience, setting us on a path to rapid economic growth.”
He added, “The scheme promotes transparency in the financial sector by formalizing legitimate foreign currency assets held outside the Nigerian banking system by Nigerians both within and outside the country. It is designed to eliminate weaknesses in the existing framework by encouraging cashless and legitimate transactions within the formal financial system, thereby strengthening regulatory enforcement and reducing the likelihood of illicit cash transactions.”
Overall, the Disclosure Scheme provides a secure and confidential avenue for individuals to reintegrate their legitimate foreign currency holdings, fostering national stability and economic growth.
