Nigeria’s banks reject deposits in dollars


The naira had appreciated against the dollar from 245 to 220 at the parallel market last week after banks started denying their customers opportunity to make cash deposits of dollar, pound and euro into their domiciliary accounts.

The naira continued its upswing at the parallel arm of Nigeria’s foreign exchange market as it closed at N209 to $1 on Monday evening as banks continue to reject dollar deposits in customers’ domiciliary accounts.

On Sunday, an anonymous forex trader stated: “We expect the naira to appreciate further this week at the parallel market”.

Currency dealers said the naira would appreciate further as deposit money banks were no longer accepting cash dollar deposit.

Elueni, who is a major operator in the BDC segment of the foreign exchange market, said the market was becoming normal and that in two weeks period, the naira/dollar exchange rate would return to N208/$.

Similarly, Guaranty Trust Bank in a message to its customers confirmed the development, it added that currency deposited hitherto would not be eligible for transfer. This is making the naira to appreciate.

Commenting on this development, the managing director and chief executive of RTC Advisory Services, Opeyemi Agbaje, explained that the overabundance of dollar cash in the vault of banks with no outlet is compounded by the fact that the Central Bank of Nigeria (CBN) is refusing to help take that cash off them.

In 2009, the central bank rescued several banks that had lent mainly to the oil and gas sector shortly before crude prices collapsed and as the stock market turned sour, triggering a near collapse of eight commercial banks.

Also, the CBN had directed that all transactions consummated by a Bureau De Change must have the Bank Verification Number (BVN) of custom with effect from August 1, 2015.

The local currency has lost around 15 per cent against the dollar over the past year, with an official devaluation in November and a de facto one in February.

The naira had weakened on the parallel market to as much as 242 to the dollar, on persistent dollar shortages.

The CBN had last month limited importers’ access to dollars on the official interbank market to buy a wide range of goods, in order to save its reserves.

The sharp fall in the global price of oil, Nigeria’s main export, triggered a currency crisis in Africa’s largest economy and strained government’s finances, while also harming the cashflow of some companies with foreign currency loans.

FCMB’s Balogun had also noted that the parallel market was beginning to see a reversal in the naira’s weakness as banks stopped taking dollar deposits.

Source-Rapid News Network

Add Comment