Log in
Show password
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 
News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

Nigeria's central bank ends dollar sales to exchange bureaus

07/27/2021 | 11:43am EDT
Nigeria's Central Bank Governor Godwin Emefiele briefis the media during the MPC meeting in Abuja

ABUJA (Reuters) -Nigeria's central bank is halting dollar sales to exchange bureaus, saying they have become conduits for graft and illicit flows of money.

"It is a huge haemorrhage on our scarce foreign exchange reserves and it cannot continue," the bank's governor, Godwin Emefiele, said on Tuesday.

The decision by the central bank, which held the benchmark lending rate at 11.5% for the fifth time in succession, follows World Bank pressure on Nigeria to provide a clearer foreign exchange management system - and converge its multiple exchange rates.

Nigeria has several exchange rates operating in parallel, a system put in place during a 2016 oil price crash because the government was seeking to avoid a large official devaluation of the naira as a matter of national pride.

Inflation has moderated after hitting multi-year highs this year because of the impact of the COVID-19 pandemic and falling oil prices, but foreign currency reserves remain under pressure.

Nigeria relies on oil for 90% of foreign exchange and another price crash last year severely limited its access to dollars.

The central bank has devalued the naira's official rate three times since the pandemic took hold early last year, and has limited dollar access for imports, but a wide gap between the official naira exchange rate and the parallel market has persisted.

An exchange bureau official who declined to be named said it had yet to receive a formal notification from the central bank.

Emefiele said the bank would channel more foreign exchange to commercial banks for consumers who had legitimate needs, and that it would no longer process or issue new licences for bureau de change operators.

"We will deal ruthlessly with the Nigerian banks who have collaborated with these illegal foreign exchange operators," he said.

Razia Khan, chief economist for Africa and the Middle East at Standard Chartered, said supplying more foreign exchange via other avenues would help, but would not necessarily solve the central bank's problems.

"The challenge in the interim will be to stop the emergence of a new parallel market," Khan said in an email. "Unless the supply of FX improves meaningfully, this is likely to remain a risk."

Emefiele also accused some international organisations and embassies of utilising illegal foreign exchange dealers to fund their local operations in "flagrant contravention of our foreign exchange laws and regulations in Nigeria."

The World Bank has said economic growth has resumed in Nigeria after the COVID-19 shock but is lagging the rest of sub-Saharan Africa, with food inflation, heightened insecurity and stalled reforms increasing poverty.

(Reporting by Chijioke Ohuocha and Libby George; Editing by William Maclean, Timothy Heritage and Mark Potter)

By Chijioke Ohuocha and Libby George

© Reuters 2021
Latest news "Economy & Forex"
07:12aARGUS MEDIA : Kuwait launches new 100,000 b/d upstream facility
06:22aPRIME MINISTER OF HUNGARY : Those who have been campaigning on the premise that the university has been shuttered have not been telling the truth
06:21aGreek pm-mediterranean countries in front line of climate change
06:21aGreek PM says climate crisis is with us and cost of ignoring it 'unimaginable'
06:21aGreek pm-climate crisis is already here and we need policies affecting every aspect of economic and social life
06:21aGreek pm mitsotakis says global cost of doing nothing on climate change is 'unimaginable'
06:09aOPEC to stick to oil production deal in October, Iraq oil minister says
06:08aUAE central bank sees COVID-19 increasing money-laundering risks
06:02aMINISTRY OF EXTERNAL AFFAIRS OF REPUBLIC OF IN : External Affairs Minister's meeting with Foreign Minister of Kingdom of Saudi Arabia
05:57aBA-owner IAG not planning to tap investors for funds - Sunday Times
Latest news "Economy & Forex"