naira to rise further as banks reject dollars

The United States dollar will further tumble against the naira at the parallel market this week as Deposit Money Banks continue to reject cash deposit of foreign currencies into customers’ domiciliary accounts.
The naira had appreciated against the dollar from 245 to 220 at the parallel market last week after banks started denying their customers opportunity to make cash deposits of dollar, pound and euro into their domiciliary accounts.
Foreign exchange dealers told our correspondent on Sunday that the naira would likely appreciate further against the dollar at the black market this week.
A forex trader, who chose to speak under the condition of anonymity said, “We expect the naira to appreciate further this week at the parallel market.
“Banks have flooded the market with dollars and other foreign currencies. This is making the naira to appreciate. There is still a huge stock of dollars out there that the banks will be pushing into the parallel market this week.”
The Acting President, Association of Bureau De Change Operators, Alhaji Aminu Gwadabe, also noted that large amount of dollars in the market would make the naira to appreciate further at the parallel market this week.
Banks had last week told customers that they would no longer collect cash deposits into domiciliary accounts.
Fidelity Bank Plc, in an email to customers, said the policy came from the Central Bank of Nigeria and it was only a temporary measure to curb speculative activities.
Guaranty Trust Bank Plc also told customers about the development in an email statement.
“Banks no longer accept dollar cash due to large speculation on the currency,” the Chief Executive Officer, First City Monument Bank, Mr. Ladi Balogun, told a conference call last week
He said the lenders would continue to receive dollar transfers from other banks.
The Governor, Central Bank of Nigeria, Godwin Emefiele, had two weeks ago said the naira was “appropriately priced” at its current level of 197 to the dollar on the interbank market.
The local currency has lost around 15 per cent against the dollar over the past year, with an official devaluation in November and a de facto one in February.
The naira had weakened on the parallel market, falling as low as 245, on persistent dollar shortages after the central bank last month limited importers’ access to dollars in order to save the external reserves.
Early last month, the central bank fixed the spread at which bureaux de change operators could sell dollars to individuals, and also limited the amount that bank customers would spend using their debits cards abroad.
Although the restrictions have angered investors and frustrated companies that need dollars for imports, Emefiele has rejected the idea of loosening the curbs, saying the central bank could not adopt an “indeterminate policy” of currency depreciation.
Global ratings agency, Standards & Poor’s, had also said Nigeria would have to devalue its currency at some stage, possibly by more than 15 per cent, though it saw the adjustments as likely to be gradual.
FCMB’s Balogun had also noted that the parallel market was beginning to see a reversal in the naira’s weakness as banks stopped taking dollar deposits.