Nigeria's interbank trading halted again as rule for forex funding change

Nigeria's interbank money market was halted for a second day yesterday after the central bank of Nigeria told commercial lenders to provide cash backing for foreign exchange purchases at its proposed intervention on Friday.

Trading on the interbank market was also halted on Tuesday as banks complied with a directive to transfer government revenues into a single account with the central bank.

President Muhammadu Buhari had ordered that all revenues be paid into the Treasury Single Account (TSA) from Tuesday, as part of a drive to fight corruption and aid transparency.

"The market is not trading yet," one dealer said. "What we have is an indicative rate from some banks because of the instruction from the central bank to provide funding for forex intervention."

"We only have people quoting about 50 percent as indicative rate for overnight placement," another dealer said.

Nigeria's central bank in August directed commercial banks to pay for their dollar purchases 48 hours in advance, in a bid to curb speculations at the forex market and drain liquidity from the banking system.

Dealers said there was minimal trading in the interbank money market at 20 percent for overnight lending on Tuesday, after the central bank released a market figure showing 486 billion naira in cash balances for commercial lenders.