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. The current black market rate is a significant improvement compared with the N225 to a dollar the currency went for as at Friday.
The development has resulted in excess dollar supply in the market, a situation that has left currency speculators and some BDC operators confused. “We don’t know what is happening in the market and nobody knows where it is headed to,” Mallam Shittu, a BDC operator in Marina, Lagos, said. Banks in the country have temporarily stopped accepting payment of dollar cash by customers into their domiciliary accounts as they move to avoid currency risk. Godwin Emefiele, CBN governor, said in an interview with THISDAY on Monday that the decision to suspend payment into domiciliary accounts was in order.
Emefiele had explained that the decision by the banks to stop collecting foreign currencies into their vaults was not taken by the CBN, but that the central bank was in support of the idea. “You cannot go to the United States where the dollar is spent and try to pay pound sterling into an account, because you will be arrested. Neither can you go into the United States and carry Euros into that economy and tell them to pay it into an account for you; you will be arrested.
The same way you cannot go to the United Kingdom where pound sterling is their unit of currency and then you carry dollars or Chinese Renminbi and try to pay into an account, because you will be arrested. “So when you look at why the banks took the decision, the banks decided to take that line of action because they felt that the level of foreign currency that had in their vaults was above the optimum level that they could manage,” he had explained. The naira had fallen to about N243 to a dollar in July, as a result of the Central Bank of Nigeria’s restriction of the funding of 41 items, including toothpicks in the official market.