CBN ban on 8 banks triggers naira’s biggest slip in new FX regime

Naira took its deepest daily interbank dip on Thursday, falling by about nine percent in less than 24 hours to trade at 342 to the dollar – its biggest daily slip since the inception of the new forex regime.

The naira, which closed at 318.25 to a single dollar on Wednesday, opened weak on Thursday, as fewer banks were allowed to trade on the official and non-official side of the foreign exchange market.

The local currency remains relatively stable at the parallel market, where it is trading between 402 to 405 to the greenback – near its closing price on Wednesday.

According to Reuters, the naira traded at an interbank all-time low of 365.25/$1  on August 18, from 350.91 on August 17, its lowest points till date.

On Tuesday, the Central Bank of Nigeria (CBN) barred nine banks from the foreign exchange market, on allegations that they were aiding the Nigerian National Petroleum Corporation (NNPC) in hiding over $2.1 billion from the Treasury Single Account (TSA).

United Bank for Africa (UBA) was however readmitted into the forex market on Wednesday, after submitting that it had returned all the monies in its coffers, belonging to the NNPC, back to the TSA.

In a statement on Wednesday, First Bank of Nigeria said it was in talks with the NNPC  and CBN on the money, insisting that the details of the account were “fully disclosed” to the apex bank.

“It is pertinent to state here that the referenced NNPC dollar accounts are fully disclosed to the CBN and are being operated in line with the regulatory requirements, whilst tripartite documented discussions have been ongoing between the CBN, NNPC and the bank on the need for domestic retention of those balances as part of measures to ameliorate challenges posed by the lack of FX availability, and customers inability to source FX to fund their trade finance obligations to the bank,” the bank said.

Also, in a statement to its customers, Key Stone Bank said: “All our efforts are geared towards a very timely resolution as we understand the importance of sourcing foreign exchange for our customers’ needs to support economic growth.

“Note, however, that this development does not adversely affect your existing transactions with us, except that there will be constraints in establishing new letters of credit until the issue is resolved.”

Other banks are said to be in discussion with the authorities for full and timely remission.