Nigeria's central bank increased the foreign currency trading position for commercial banks on Thursday to 0.5 percent of their capital base from 0.1 percent, in a move to shore up interbank dollar liquidity.
Liquidity conditions have deteriorated as the naira has slumped to record lows because dollar inflows from foreign investment and other sources have dried up.
The central bank is having to intervene and sell dollars into the market, but that is burning up its foreign reserves.
According to a circular seen by Reuters, the central bank said funds sold to commercial lenders would be used for funding letters of credit, other invisible trades but should not be resold to bureau de change dealers.
The central bank had reduced dealers open positions from 1 percent to zero in a bid to stabilise the currency after it was devalued by 8 percent against the dollar in November.
Last week it allowed banks a 0.1 percent net position but warned them against carry trades or speculative activity.
The naira is at risk of speculative attacks as it is being hit hard by the slump in oil prices and by pressure on emerging market currencies as the dollar strengthens on expectations the United States will soon raise interest rates.
No comments:
Post a Comment