The Nigerian currency, Naira continues to gain more weight in the unofficial foreign exchange market, as it was quoted at N216 to the dollar on Monday.
This was a sharp rise from 240 a week ago.
The massive gains are being linked to the rejection by the commercial banks of dollar and pound sterling deposits in domiciliary accounts.
The naira closed at 225 on the parallel market on Friday, traders said. On the official interbank market, it traded 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.
Some traders and surprisingly the opposition Peoples Democratic Party have been attacking the new foreign policy regime, that has seen an appreciation of the Nigerian currency.
But the Central Bank issued a press release at the weekend explaining its position.
In the statement titled: “Renewed Vigilance to Prohibit Illicit Financial Flows in Nigeria’s Banking System”, signed by Ibrahim Muazu, Director Corporate Communication, CBN, stated: “The Central Bank of Nigeria (CBN) notes with concern a recent report by the Global Financial Integrity group, which ranks Nigeria as one of the 10 largest countries for illicit financial flows in the world.
“Although we do not have an independent confirmation of this assertion, the report estimates that about US$15.7 billion of illicit funds go through our system annually.”
It added that “CBN will increase its vigilance to ensure that Nigerian banks are not used as conduits for illicit fund flows, especially in foreign currencies.
“We note and applaud that in line with global best practice, Nigerian banks have started to curtail the acceptance of foreign currency cash deposits, much the same way as customers in other countries cannot just walk into banks and make foreign currency cash deposits without proper documentation.
“We wish to assure all citizens seeking foreign currencies for legitimate personal and/or business interests that there remains ample opportunity to do so within the law. The CBN’s Foreign Exchange Rules have many windows for accessing foreign exchange for legitimate business as well as for personal commitments.”