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Closure of interbank market pushes naira to N273 per dollar




CLOSURE of Interbank Foreign Exchange Market operations for the year by the Central Bank of Nigeria (CBN) yesterday, increased pressure on the naira, pushing it to N273 to the dollar.

The development, which has been described as “unannounced and sudden”, and would remain shut till January 4, 2016, had earlier raised speculations among traders over whether or not the apex bank would intervene for the last time before the year ends.

The currency had appreciated to N255 at the weekend due to over $20 million intervention by the apex bank, after falling to N280 to the dollar at the parallel market.

A source quoted the Director of Corporate Communications, CBN, Ibrahim Mu’Azu, as saying that the bank was closing the official window to end the multiple exchange rate and preserve the country’s dwindling external reserves.
“Undesirable practices, including round tripping, speculative demand, rent seeking, spurious demand and inefficient use of scarce foreign exchange resources by economic agents, it has become imperative that appropriate actions be taken to avert the emergence of multiple exchange rates regime and pressure the country’s foreign exchange reserves.
“Consequently, we wish to inform all authorised dealers and the general public that with effect from the date of this press release, the rDAS/wDAS foreign exchange window with the CBN is hereby closed. Henceforth all demand for foreign exchange should be channeled to the interbank forex market,” he said.

Meanwhile, the Acting President of the Association of Bureau De Change Operators of Nigeria, Alhaji Aminu Gwadabe, said bureau de change operators have asked CBN to intervene once more and at the usual rate of $30,000 per operator to force down the pressure before closing the window for the year.

He said though CBN has not officially communicated plans to close for the year, it did not ask for bids and naira provisioning, which usually takes place before now for the mid week auction.

He also noted that the non-communication at the moment is driving the new pressure because if it fails to intervene on Wednesday, there may not be another opportunity before the Christmas, which also means that the naira ended the year badly.
“We believe the gap at present, if not closed before closing the market, will fuel further speculative attack on the currency. Their silence at the moment is already erasing the gains made over the weekend.
“Mid-week auction programmes should have been communicated by now. While we are not foreclosing the intervention, we still feel it may become sudden if they come tomorrow to ask for the provisions, although the market would be waiting for them,” he said.

However, Gwadabe said that naira has continued to depreciate overtime due to leakages in the system, which may not stop until they are identified and blocked, because the attention has been on the speculation and hoarding which are less problematic.

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