Naira Declines to N409 on Black Market Following the Suspension of Banks from Forex Transaction
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Nigeria’s naira on Thursday declined to N409 to the dollar on the black market, compared to N402 the previous day, after the suspension of some Nigerian banks from forex trading which resulted to difficulty in obtaining the dollar.
The central bank suspended nine commercial banks from forex transactions on Tuesday for failing to remit money owed to the government – although UBA was readmitted afterwards.
Reacting to the development, bureaux de change operators explained that the currency crash was due to the impact of the suspension, thereby compounding the dollar shortages Nigeria has been struggling with due to the crash in the price of its oil.
“The suspension of some banks from transaction in the forex market has really increased pressure on the market,” Said Aminu Gwadabe, president of the bureaux de change association.
It will be recalled that since the incidence of the suspension, some bank executives have been meeting with central bank officials to resolve the forex transaction issue as investors continued to dump their shares.
Amongst the banks suspended, Skye Bank fell the most from foreign exchange transactions, shedding 7.81 per cent, followed by Fidelity Bank down by 3.0 per cent. FBN Holdings shed 1.9 per cent, while Diamond Bank and FCMB were down to 0.8 per cent.
The crash pulled the main index down 1.8 per cent. On the interbank market, the currency gained 0.2 per cent to close at N305.
Meanwhile, the Central Bank of Nigeria(CBN) has settled $152.48 million of naira futures contracts sold in June at an exchange rate of 279 naira per dollar, market regulator FMDQ OTC Securities Exchange said.
The bank has therefore entered a fresh 12-month contract at 241 per dollar which would be due on August 16, 2017.
In June, CBN introduced an over-the-counter futures market on the currency to help manage dollar demand, quoting the naira at 279 to a dollar in a span of a month and at 210 by April 2017.
Source:Ledership
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