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CBN restricts dollar sale to save naira

By on November 8, 2014

The Central Bank of Nigeria has stopped the sale of dollars to some categories of importers at its twice-weekly regulated foreign exchange market in order to save the naira from falling.

The move is meant to also reduce the pressure on the naira amid falling oil prices and perceived dollarisation of the economy, according to industry analysts.

In a circular released on Thursday, the central bank specifically said it would no longer sell dollars to importers of electronics, finished products, information technology equipment, generators, telecommunication equipment and invisible transactions at its Retail Dutch Auction System forex market.

According to the directive, the importation of the listed items will now be funded at the interbank forex market only.

The circular was signed by the Director, Trade and Exchange Department, Mr. O.I Gbadamosi.

It read in part, “In order to maintain the existing stability in the foreign exchange market and to further strengthen the various policies already initiated by the CBN, the importation of the items shall henceforth be funded from the interbank foreign exchange market only.”

Meanwhile, the CBN said it had also reviewed the guidelines for the operation of its Standing Deposit Facility in order to encourage banks and discount houses to lend to the productive sectors of the economy.

The central bank noted that banks and discount houses preferred keeping their idle balances at the CBN’s SDF, thereby constraining the process of financial intermediation.

Consequently, it has reduced the remunerable daily placements by banks and discount houses at the SDF to maximum of N7.5bn.

In a circular signed by its Director, Financial Markets, Mr. E. U Ukeje, the central bank said, “All deposits by a bank or discount house in excess of N7.5bn shall not be remunerated.”

 

[Punch]