Nigeria’s central bank in ‘talks’ to ease naira rules
NIGERIA’S central bank had started talks with banks and currency dealers on how to loosen foreign exchange trading restrictions, while maintaining stability in the naira, people familiar with the discussions said.
The Financial Markets Dealers Association (FMDA), a Lagos-based industry body, met last week to put a proposal together that might be presented to the regulator as early as this week, two of the people, who asked not to be identified because the talks were private, said.
The FMDA would recommend ways to increase trading and liquidity in the foreignexchange market, while at the same time avoiding speculative demand that might significantly weaken the naira, they said.
The central bank of Africa’s biggest oil producer has implemented several measures since December to bolster the naira, which has weakened 19 percent against the dollar since the end of June, by limiting the buying of dollars in the interbank market.
In February, it introduced a so-called order-based trading system in which banks can only buy foreign currency when they have matching orders from clients that need to import goods.
The central bank had not made any decision to change the trading rules currently in place, Ibrahim Mu’azu, a spokesman in Abuja, said.
David Adepoju, the Lagosbased president of the FMDA, said he was on holiday and referred requests for comment to Adebayo Adeyemo, the vicepresident, who did not immediately respond to an e-mail. Naira weakens The naira weakened 0.8 percent to 200.55 (R11.97) per dollar in Lagos. The unit has closed at between 198 and 200 almost every day since the start of March.
One-month volatility fell to the lowest level in six years last month as the central bank’s rules took effect.
The restrictions have left the naira overvalued and stopped many foreign investors, including Morgan Stanley and Aberdeen Asset Management, from buying local currency bonds until the currency weakens.
The central bank probably would not make any changes to the foreign exchange regime until after the new government of Muhammadu Buhari, who defeated President Goodluck Jonathan in a March election, was sworn in on May 29, two of the people said. – Bloomberg