The Central Bank of Nigeria (CBN) has called a meeting with chief executives and treasurers of commercial lenders today to discuss issues surrounding its policy on the foreign exchange market, multiple banking sources told Reuters.
The apex bank imposed tight controls on the foreign exchange market in February in a bid to curb speculation on the currency and save its dwindling foreign reserves and the weakening of the naira in Africa’s biggest economy. Before setting the restrictions, the CBN had been battling to prop up the naira after a sharp fall in the price of oil, Nigeria’s main export, which triggered a sell-off in assets by foreign investors. The regulator also fixed the rate at which banks can buy dollars from oil companies.
Traders were upbeat on the outcome of the meeting, which they claimed was long overdue to ease the tight control in the market and allow the local currency to find its real value.
“We are anticipating that the meeting would naturally discuss the present market conditions and explore possibility of reviewing the tight control on the forex market,” one senior treasurer told Reuters. JPMorgan has threatened to eject Nigeria from its Government Bond Index (GBIEM) by the year-end unless it restores liquidity to currency markets in a way that allows foreign investors tracking the benchmark to transact with minimal hurdles.
The CBN set its exchange rate peg at N198 to the dollar in February but has changed it to N196.90 against the dollar last week, with dealers, saying the tweaking was not a reflection of the market. The restrictions included central bank plans to limit the amount commercial bank customers can spend using their debits cards while abroad in a crackdown on dollar demand to save its dwindling foreign reserves.
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