The Central Bank of Nigeria (CBN) says it’s investigating the foreign-exchange transactions of lenders operating in the country.
Following “recent occurrences in the market”, the Central Bank of Nigeria “would like to remind banks to desist from all and any forms of foreign exchange (forex) malpractices”, the regulator said in a statement on Friday. Any lenders “found culpable with ongoing investigations” could have their foreign-exchange operating licenses suspended for at least a year”, it said.
The naira had plunged to another record on Friday in the unauthorised market, , defying efforts by the central bank to stabilise the currency, trading at N545 to the dollaraccording to Abokifx, an online platform that tracks the data. That is a spread of about 33 per cent from the official spot rate of about N411 to the dollar.
The central bank wants to stabilise the currency, trading at N545 to the dollar.
Individuals and companies have to rely on the parallel market for their foreign-exchange requirements because the central bank is rationing dollars.
Individuals and companies have to rely on the parallel market for their foreign-exchange requirements because the central bank is rationing dollars. The regulator’s plan to throttle the illegal market – by banning sales to money traders to reprimanding people who profit from the arbitrage – isn’t working and dealers are speculating the currency will weaken further.
“The central bank’s capital controls have forced some of the demand to the parallel market”, said Omotola Abimbola, an analyst at Lagos-based investment bank Chapel Hill Denham. Nigeria’s proposal to sell overseas bonds and the inflow of the International Monetary Fund’s special drawing rights offers the central bank “a window of opportunity” to improve supply and end the arbitrage, he said.