Nigeria’s Banks Reject Deposits In Dollars

The naira gained on the parallel market on Monday, after Nigeria’s commercial banks stopped accepting cash deposits in dollars, a move to discourage speculation in the currency.

The naira was quoted at 216 on the parallel market on Monday, strengthening by 4.1 percent from 225 naira to the dollar on Friday. It was quoted at 240 a week ago.

On the official interbank market, the naira traded at 199 at 1130 GMT, near the central bank’s pegged rate of 197.

“Banks are rejecting dollar deposits … they are not able to transfer excess liquidity to their correspondent banks abroad, which is restricting importers from using domiciliary accounts,” said Aminu Gwadabe, president of Nigeria’s Bureau de Change association.

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