• Login
  • Register
Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
Nairametrics
No Result
View All Result
Home Markets Currencies

Why Nigeria’s FX Market Shut Down Today (11/2/2015)

Nairametrics by Nairametrics
February 11, 2015
in Currencies, Politics
Share on FacebookShare on TwitterShare on Linkedin

Nigerian dealers pulled the plug on electronic trading in the naira currency on Wednesday after it slid past the key level of 200 to the dollar on fears the postponement of this week’s election could trigger a constitutional crisis.

Deploying for the first time a ‘circuit-breaker’ agreed among themselves last month, leading banks in Lagos halted trade after the naira dropped more than 2 percent.

At its weakest, it was quoted at a record low of 204.25 to the dollar, a decline of 20 percent since the start of November.

RelatedStories

CBN issues directive to curb mass sacking by banks

How companies determine who to fire in an economic crunch

November 29, 2022
shopping mall prices

Why A Drop In Inflation Does Not Necessarily Mean A Drop In Prices Of Commodities

July 17, 2019

The rout has been driven by the combination of a tumbling oil price and a rise in political risk, highlighted last Saturday when authorities pushed back the Feb. 14 presidential election by six weeks, blaming an Islamist insurgency by Boko Haram militants.

It was not clear when normal currency trading might resume. Although the halt is meant to calm nerves, it undermines Nigeria’s credibility as a smoothly operating capital market and could trigger its ejection from a key JP Morgan emerging market bond index.

In the year after Nigeria joined the index in October 2012, foreign bond-holdings jumped from $1.2 billion to $5.4 billion, but JP Morgan said last month Nigeria’s inclusion was under review because of a lack of market liquidity.

Ejection from the index would trigger major capital outflows because investors who track it would have to sell Nigerian bonds. That would exacerbate a budget crunch in Abuja by removing an important source of funding and further hammer the currency.

In another sign of strain on the financial system, the rate banks charge each other for overnight lending spiked to 100 percent this week as the central bank sucked up naira to support the currency rather than continuing to leak foreign reserves.

“The tighter the liquidity to maintain the currency at current levels, the less likely JP Morgan is to keep them in the index,” said Renaissance Capital analyst Charles Robertson.

“That will make it harder for them to attract budget financing flows, and at a time when oil is cheap that’s not helpful.”

Last year the central bank spent an average of $20 million a day defending the naira, burning through 20 percent of its reserves in an attempt to offset the halving of the oil price. Crude oil accounts for more than 90 percent of Nigerian foreign exchange.

RUNNING DRY

During their self-imposed hiatus, dealers continued to trade naira over the telephone. Even after the central bank intervened by selling an unspecified quantity of dollars, they were still reluctant to quote two-way prices.

“Liquidity dried up but the naira was still depreciating,” one dealer said. “So everyone stopped quoting on a two-way basis.”

The naira is officially pegged at 160-176 against the dollar after an 8 percent devaluation in November but it has rarely traded within that range, and most analysts reckon authorities will have to devalue again.

Non-deliverable forwards — contracts used to bet on future exchange rate moves — price the naira as much as 30 percent weaker in a year’s time.

The central bank was widely expected to make its move after the election scheduled for Feb. 14, but the decision to postpone it until March 28 has rattled investors.

Speculation is swirling that the date could be pushed back again, pitching Africa’s top oil producer and most populous nation towards a constitutional crisis.

President Jonathan’s mandate expires on May 29, and the constitution says an election must be held 30 days before that date.

Lagos-based Femi Falana, one of Nigeria’s leading lawyers, has called the postponement “a coup against the constitution by the security chiefs” and said the precedent created made it easy to justify further delays.

“Having used (the security forces) to shift the election, what’s to stop them saying there will be no election?” he said.

 

Source: Reuters

 

Tags: News Review
Nairametrics

Nairametrics

Nairametrics is Nigeria's top business news and financial analysis website. We focus on providing resources that help small businesses and retail investors make better investing decisions. Nairametrics is updated daily by a team of professionals. Post updated as "Nairametrics" are published by our Editorial Board.

Related Posts

CBN issues directive to curb mass sacking by banks
Small Business

How companies determine who to fire in an economic crunch

November 29, 2022
shopping mall prices
Blurb

Why A Drop In Inflation Does Not Necessarily Mean A Drop In Prices Of Commodities

July 17, 2019
Treasury Bills
Financial Literacy

20 Financial Terms You Need To Know In The Stock Market

August 5, 2018
MTN Nigeria Plc
Business News

30% equity of MTN’s shares could go to retail investors

June 13, 2018
[The Nigerian Economy Daily] FG has approved the closure of five foreign missions and embassies
Macros

THIS WEEK: Big Macros and a very important task for President Buhari.

June 10, 2018
internet subscriptions growth
Business News

Why Glo and 9mobile are losing their internet mobile subscribers

June 5, 2018
Next Post

Top 5 Gainers and Losers (11/2/2015)

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Emple
nlng
first bank
Zenth Bank








DUNS

Recent News

  • EFCC arraigns SunTrust Bank MD, Executive Director over alleged $12 million money laundering 
  • Cornerstone Insurance declares 27 kobo final dividend, reveals payment date and criteria 
  • Oil Subsidy Fraud: EFCC declares Fargo Petroleum MD wanted over alleged N976 million scam 

Follow us on social media:

Recent News

EFCC: Achimugu’s case unrelated to Atiku, Sanwo-Olu, agency says

EFCC arraigns SunTrust Bank MD, Executive Director over alleged $12 million money laundering 

June 13, 2025

Cornerstone Insurance declares 27 kobo final dividend, reveals payment date and criteria 

June 13, 2025
  • iOS App
  • Android App
  • Contact Us
  • Home
  • Markets
  • Sectors
  • Economy
  • Business News
  • Financial Literacy
  • Disclaimer
  • Ads Disclaimer
  • Copyright Infringement

© 2025 Nairametrics

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Social Media Auto Publish Powered By : XYZScripts.com
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Login
  • Sign Up

© 2025 Nairametrics