Nigerian bank acts to prevent speculation

NIGERIA banned banks from taking foreign currency deposits as Africa’s largest economy seeks to control financial flows and avoid speculation against the local currency.

“Only wire transfers to and from domiciliary accounts are henceforth permissible,” the Abuja-based Central Bank of Nigeria said on Wednesday.

Some Nigerian banks, including Guaranty Trust Bank and Fidelity Bank, sent text messages to customers at the weekend informing them that they will no longer receive foreign currency deposits in cash, citing large volumes of the funds in their vaults.

The step would curb speculation on the naira, Ibrahim Mu’azu, a spokesman for the central bank, said on August 2.

Governor Godwin Emefiele in June banned some importers from using official foreign currency channels, leaving many to use illegal markets for about 40 categories of goods, including furniture, textiles and rice. The move was the latest in a series of controls to support the naira amid a 50 percent slump over the past year in the price of oil, which accounts for about 90 percent of export earnings.

The naira strengthened on the black market on Monday to 215 (R13.59) per dollar from 240 as traders flooded it with the US currency following the rejection of the deposits by lenders. The currency gained further yesterday, advancing to 208 per dollar, Hasan Melo, the head of Roysygma Bureau de Change, said from Lagos.

On the official interbank market, the rate dropped less than 0.3 percent to 199.25 per dollar as of 9.42am in Lagos yesterday, having remained mostly below 200 since March. – Bloomberg