AfricaNews - Nigeria banks crippled

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Nigeria banks crippled

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Posted on Wednesday 5 August 2009 - 12:15
tamsgogo
Tamunobarabi Gogo Ibulubo, AfricaNews reporter in Port Harcourt, Nigeria
The Central Bank of Nigeria has barred banks from trading in foreign exchange sourced from the official market among themselves. The move is intended to curb the rising speculation in activities prevailing in the nation's foreign exchange market.
In a circular entitled: “Non-Transferability of Funds from Wholesale Dutch Auction System (WDAS) Among Authorized Dealers”, the apex bank stated that banks can no longer use foreign exchange sourced from the official market for inter-bank trading. Such funds should only be used to meet customers demand for foreign exchange alone.

It also directed the banks to keep separate books for their inter-bank foreign exchange transactions and WDAS foreign exchange transactions as well as make the books available to examiners.

Money market operators however said that the apex bank, by the measure, has technically suspended the inter-bank foreign exchange market, as 85 per cent of interbank foreign exchange transaction is driven by foreign exchange from the official market.

They also said that since banks can only buy for customers, the apex bank has also technically reverted to Retail Dutch Auction System (RDAS).

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Nigeria banks crippled

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