The replacement of the old banknotes recently announced, and the short period given for their replacement, are affecting the value of the naira in the informal market.
Holders of large amounts of undeclared cash cannot deposit them to a bank account, opting instead to buy foreign currency in the black market, which puts their operators in the position of trying to find a way to deposit the notes in their bank account without raising red flags. On top of this banks are charging a 3% fee to accept cash deposits over NGN500,000.
The informal market dollar rate is about NGN775 against a bank rate of NGN438.
Both banks and money changers are wary of receiving undeclared large amounts of naira, given strict AML rules.
To make matters worse, the Central Bank of Nigeria has not yet informed whether the old notes will be redeemable after 31 March 2023, giving a very short window for their exchange for such a large country, Africa’s most populous.
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