Dealers reluctant to trade naira after new CBN rules

naira-notes

Currency traders in the country were mostly reluctant to quote prices for the naira on Thursday, amid confusion about the impact of a central bank adjustment to foreign exchange trading regulations.

The changes issued by the central bank overnight stipulate that dealers had to reduce the percentage of “shareholders funds” that they could hold in dollars from 1 percent to zero.

“Any infraction of the requirement of this circular … will attract appropriate sanction, which may include suspension from the foreign exchange market,” the circular signed by Trade and Exchange Department Director Olakanmi Gbadamosi said.

Officials at the bank were not immediately available for comment.

No prices were quoted for nearly an hour after the market opened, after which very few trades were executed. Dealers said most of them were not trading while they conclude discussions on how to proceed with regard to the new rules.

The naira touched 187.41 against the dollar, close to its record intraday low on Dec. 2 of 187.56 to the dollar, in very thin trade. It later rose to 185.70 to the dollar.

The currency of Africa’s biggest economy has taken a beating since the central bank devalued it by 8 percent last month in a bid to halt the slide of its foreign exchange reserves, which were triggered by a near halving of world oil prices since June.

The naira closed at a record low on Wednesday, a day on which Finance Minister Ngozi Okonjo-Iweala also slashed Nigeria’s 2015 growth forecast in the budget speech.

Source : BusinessDay

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