Nigeria’s central bank banned banks from taking foreign-currency cash deposits and will boost supply of dollars to money changers this week as it seeks to bolster the currency of Africa’s biggest oil producer and economy.
Only wire transfers to and from foreign-exchange accounts, also known as domiciliary accounts, are now allowed, the Abuja-based Central Bank of Nigeria said in a statement on its website on Wednesday.
The move will help “efforts to stop illicit financial flows in the Nigerian banking system,” it said.
“The central bank is doing all it can to control demand for dollars,” Sewa Wusu, head of research at Sterling Capital Markets Ltd., said by phone from Lagos. “It sends another signal to the market that the CBN is assertive and determined to ensure there are no arbitrage opportunities.”
The ban is the latest in a series of controls to support the naira amid a more-than-50 percent slump over the past year in the price of oil, responsible for about 90 percent of Nigeria’s export earnings, and save the country’s reserves, down one-fifth to $31.6 billion since the end of September.
Governor Godwin Emefiele in June stopped importers of about 40 types of goods, including furniture, textiles and rice, from accessing official foreign-currency channels, leaving many to use illegal markets.
Large Volumes
Some Nigerian banks including Guaranty Trust Bank Plc and Fidelity Bank Plc sent messages to customers at the weekend informing them that they will no longer accept foreign currency deposits in cash, citing large volumes of such funds in their vaults which they can’t place with the central bank.
The step will curb speculation on the naira, Ibrahim Mu’azu, a spokesman for the central bank, said Aug. 2. The central bank will also sell as much as $30,000 to each of Nigeria’s 2,715 registered money changers on Friday, Aminu Gwadabe, president of the Association of Bureaus de Change of Nigeria, said by phone from Lagos.
The last such “special intervention” was “two to three months ago” and this one will be in addition to regular weekly sales of about $80 million, he said.
“Every bureau will take up the opportunity,” Gwadabe said. They have “been clamoring” for more dollar supplies from the central bank, he said.
Black Market
The naira strengthened on the black market on Monday to 215 per dollar from 240 as traders flooded it with U.S. currency following the rejection of the deposits by lenders. It was around 218 on Thursday, said Gwadabe.
On the official interbank market, the rate dropped 0.2 percent to 199.02 per dollar as of 12:45 a.m. in Lagos on Thursday, having remained mostly around that level since March. It has weakened 19 percent in the past year.
Emefiele has been summoned to the Senate in Abuja to explain the naira’s weakness on the parallel market, Lagos-based newspaper Vanguard reported on Wednesday, without saying when he would appear. Mu’azu, the central bank spokesman, didn’t answer calls to his mobile phone.
bloomberg.com
Only wire transfers to and from foreign-exchange accounts, also known as domiciliary accounts, are now allowed, the Abuja-based Central Bank of Nigeria said in a statement on its website on Wednesday.
The move will help “efforts to stop illicit financial flows in the Nigerian banking system,” it said.
“The central bank is doing all it can to control demand for dollars,” Sewa Wusu, head of research at Sterling Capital Markets Ltd., said by phone from Lagos. “It sends another signal to the market that the CBN is assertive and determined to ensure there are no arbitrage opportunities.”
The ban is the latest in a series of controls to support the naira amid a more-than-50 percent slump over the past year in the price of oil, responsible for about 90 percent of Nigeria’s export earnings, and save the country’s reserves, down one-fifth to $31.6 billion since the end of September.
Governor Godwin Emefiele in June stopped importers of about 40 types of goods, including furniture, textiles and rice, from accessing official foreign-currency channels, leaving many to use illegal markets.
Large Volumes
Some Nigerian banks including Guaranty Trust Bank Plc and Fidelity Bank Plc sent messages to customers at the weekend informing them that they will no longer accept foreign currency deposits in cash, citing large volumes of such funds in their vaults which they can’t place with the central bank.
The step will curb speculation on the naira, Ibrahim Mu’azu, a spokesman for the central bank, said Aug. 2. The central bank will also sell as much as $30,000 to each of Nigeria’s 2,715 registered money changers on Friday, Aminu Gwadabe, president of the Association of Bureaus de Change of Nigeria, said by phone from Lagos.
The last such “special intervention” was “two to three months ago” and this one will be in addition to regular weekly sales of about $80 million, he said.
“Every bureau will take up the opportunity,” Gwadabe said. They have “been clamoring” for more dollar supplies from the central bank, he said.
Black Market
The naira strengthened on the black market on Monday to 215 per dollar from 240 as traders flooded it with U.S. currency following the rejection of the deposits by lenders. It was around 218 on Thursday, said Gwadabe.
On the official interbank market, the rate dropped 0.2 percent to 199.02 per dollar as of 12:45 a.m. in Lagos on Thursday, having remained mostly around that level since March. It has weakened 19 percent in the past year.
Emefiele has been summoned to the Senate in Abuja to explain the naira’s weakness on the parallel market, Lagos-based newspaper Vanguard reported on Wednesday, without saying when he would appear. Mu’azu, the central bank spokesman, didn’t answer calls to his mobile phone.
bloomberg.com
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