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- Nigeria’s central bank has directed commercial banks to pay for their dollar purchases 48 hours in advance, after banning them from accepting foreign currency cash deposits to curb dollar demand and stem illicit financial flows.
- Dealers said banks would struggle to buy the U.S currency on behalf of customers, while the ban on dollar cash deposits would stem speculation.
- The central bank in June curbed access to the interbank currency market to preserve its foreign reserves.
- The move led to the diversion of dollar demand to the black market, weakening the local currency.
- “We are now required to deposit the naira equivalent of our total forex bids to the central bank 48 hours in advance before its intervention,” a dealer told Reuters.
- The measures led to a sharp increase in interest rates on the interbank market, traders said.
- The Naira closed at 197 to the dollar on the interbank market, the same level it has closed over the last two weeks. In the parallel market, the naira was broadly flat at 218 to the dollar against 219 on Wednesday.
- Source: Reuters
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