Nigerian foreign exchange dealers have agreed to introduce a stricter trading curb in order to stem large fluctuations in the value of the country’s embattled currency.
The naira, which is under pressure from an oil price rout, political turbulence, central bank rules and the Boko Haram insurgency, set a record low of N189.22 per dollar, a fall of 1.5 per cent, before reversing and gaining 1.9 per cent late on Wednesday.
The decision by the Nigerian Financial Markets Dealers Association, initially reported by wire services and confirmed by currency dealers, comes after the nation’s central bank issued rules to stop speculation in the currency that have reduced price liquidity.
The market will now halt trading in the naira once it changes more than 2 per cent during a session.
Nigeria’s central bank, which has limited foreign exchange reserves for defending the currency, has reduced the net open foreign exchange positions banks can hold at the end of each business day to 0.1 per cent of their shareholders’ funds in an attempt to stem currency speculation, a policy seen impairing overall market liquidity.
Mr Gadio said the central bank action had reduced ticket sizes banks can deal in and heightened market volatility.
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