Market data including bonds and fuel prices
That turnip Mapisa-Nqakula has confirmed beyond any doubt that the party cannot be renewed or rehabilitated
But advocate Mpofu says justices must accept former prisons chief granted parole correctly
Provincial chair elect indicates he will support Ramaphosa’s re-election as ANC president
Business Day TV talks to independent analyst Loyiso Mpeta
Consumer finances crumble under the pressure of rising prices and interest rates, Unisa vulnerability report shows
Some in the industry believe a ban on the export of scrap will mean a more competitive steel industry, with lower prices passed on to consumers
Washington targets chief of staff Nathaniel McGill, chief prosecutor Sayma Syrenius Cephus and Bill Twehway, MD of Liberia’s National Port Authority
Veteran seamer believes he still has plenty to offer despite turning 40
Porsche Taycan Turbo S laps the famous German circuit in seven minutes and 33 seconds
Nigeria’s central bank halted the sale of foreign exchange to money changers to ease pressure on the nation’s currency, governor Godwin Emefiele said.
The decision will halt the supply of $5.72bn annually by the central bank to the West African nation’s bureaus de change — a key source of foreign exchange for Nigerians travelling abroad and local businesses.
The central bank will also stop issuing new licences to currency-trading companies, whose number more than doubled to almost 5,500 over the past five years, Emefiele said at a briefing Tuesday in the capital, Abuja.
The measure may lead to an initial depreciation in the naira’s value as the sudden withdrawal of supply from the central bank causes the price of dollars to increase.
“Hoarding of dollars is expected to accompany and worsen the knee jerk reaction in the market, as participants gear up for a tighter foreign-exchange market,” Lagos-based investment bank Comercio Partners said in an emailed note.
The central bank took the step because some bureaus de change have become “greedy” chasing higher profits and their demand for foreign currency is bringing pressure to bear on the naira and the nation’s reserves, Emefiele said. The central bank will only supply dollars through commercial lenders from now on, he said.
“We have noted with disappointment and grave concern that our bureau de change operators have abandoned the original objective of their establishment, which was to serve retail users who need $5,000 or less,” Emefiele said. “Instead, they have become wholesale dealers” who trade in millions of dollars per transaction, he said.
The measure is the latest step by Emefiele to support the naira, which the central bank has devalued three times since March 2020 as lower oil income eroded the nation’s reserves.
Nigeria previously banned foreign-exchange sales to money traders in March 2020, to prevent people congregating at bureaus de change at the onset of the coronavirus pandemic. Before that, it suspended supply in 2016 when Africa’s largest oil producer faced a decline in foreign-exchange earnings because of lower crude prices.
The decision will enable the bank to close companies that have exploited the market by buying dollars from the central bank at 390 naira and then selling them at 500, said Financial Derivatives CEO Bismarck Rewane in Lagos.
“It will give the central bank enough time to sanitise the bureau-de-change space, leaving only the credible institutions,” he said.
Aminu Gwadabe, president of the Association of Bureau de Change Operators of Nigeria, said he was meeting with other industry representatives and could not immediately comment when contacted on Tuesday.
Emefiele also announced plans to introduce a digital currency, known as the e-naira, by October. It will complement existing types of money and not replace it. The e-naira’s launch will result in some balances at the nation’s lenders being converted to digital currency, he said.
Bloomberg News. More stories like this are available on bloomberg.com
Would you like to comment on this article? Register (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.