Nigeria: Naira Hits New Low As Forex Crisis Worsens

The naira yesterday dropped to 402 to a dollar at the parallel market after nine banks were barred fro foreign exchange market for failure to remit about $2.3bn NNPC/NLNG dollar deposit to the Treasury Single Account.

On Tuesday, traders exchanged naira at 395 to a dollar, but a day after, it depreciated by about 1.8 percent against the greenback. At the interbank market, the naira went from 305 on Tuesday to 335 to a dollar yesterday.

The banks affected and their respective indebtedness to the TSA were United Bank for Africa (UBA), $530m; First Bank of Nigeria (FBN) $469m; Diamond Bank Plc ($287m); Sterling Bank Plc ($269m); Skye Bank Plc ($221m); Fidelity Bank ($209m); Keystone Bank ($139); First City Monument Bank (FCMB) $125m; and Heritage Bank ($85m).

Analysts say with the recent ban, the country would face even bigger challenge in the coming days.

A trader, Shehu Aliyu, told Daily Trust yesterday that there was no dollar in the market and only God knew how much it would be by the end of trading tomorrow.

The Central Bank of Nigeria (CBN) and the banks agreed after the Bankers Committee meeting last week to sell $50,000 from Diaspora remittances to bureau de change (BDCs) on weekly basis.

Shehu said since the directive by the CBN to banks to commence sale of the FOREX to the BDCs two week ago, very few of the street operators accessed the Forex.

He said most of them had deposited money for about 10 days, but the banks failed to remit the FOREX to them.

In Lagos, the President, Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said only 10 per cent of BDCs from the Lagos market accessed dollar from banks since the CBN gave the directive nearly three weeks ago.

He regretted that BDCs in Port Harcourt, Kano, Abuja, Onitsha, Maiduguri, Benin and Enugu were yet to get a single dollar from the banks.

He said: “The banks are also selling between N345 and N355 to the dollar, far above the interbank rate.

“The banks are supposed to sell to the BDCs on the same day within the week, but have failed to do so. Instead of staggering the payment, the banks should sell to the BDCs on the same week day, so that the impact will be felt in the market.

“We also want the CBN to licence new International Money Transfer Operators (IMTOs) to deepen the market,” he said.

He said BDC members across the country have funded their accounts for over two weeks but the banks were not selling to them.

UBA readmitted to FX trading by CBN

Meanwhile, the United Bank for Africa (UBA) has said the CBN has re-admitted them back into the FOREX market as they have remitted all NNPC/NLNG dollar deposits.

In a statement, yesterday, the UBA management said, “We are pleased to inform our valued customers, stakeholders and business partners as well as the general public that the CBN has re-admitted us into the Foreign Exchange Market following our remittance of all NNPC/NLNG dollar deposits.”

Fidelity Bank repays over $288m to TSA

In their rejoinder on the suspension, Fidelity Bank has said it has repaid over $288m of the funds in line with the advised repayment schedule to the TSA.

A statement sent to its customers said. “We will like to clarify that these deposits were duly reported to the CBN by Fidelity Bank in line with the extant TSA requirements contrary to the erroneous view in certain media reports that the funds were concealed from the regulators.

“Although the market condition remains quite challenging, we will continue to honour our obligations and operate with the highest level of corporate governance. In the interim we are engaging with the other eight banks involved, stakeholders and the regulators to resolve this issue quickly and ensure our return to the FX market,” the bank said.

Union kicks against CBN ban

The decision of the Central Bank of Nigeria to sanction nine banks over their refusal to remit $ 2.334 billion Nigerian National Petroleum Corporation (NNPC) funds into the Treasury Single Account (TSA) is a misplaced priority and would worsen foreign exchange transactions in the country, the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI), has said

The president of the union, Comrade Sunday Salako, in a statement yesterday also expressed reservation over the ability of the affected banks to pay the debt due to the prevailing economic crunch in the country.

This, he said, would create panic and unsettling effects in the nation’s banking sector.

Source: Daily Trust.