Nigerian dollar dealers halted trading after a central bank rule to limit the historic failure of plunging naira. How much is one dollar to naira? It is only a couple of days before people start trading at 200 to a dollar.
“This raises concerns about the credibility of the central bank,” Kevin Daly, senior portfolio manager at Aberdeen Asset Management Plc, said by phone from London. “If it was their intention to stabilize or see some appreciation of the naira, it’s backfired.”
Bid and ask prices for the Nigerian naira were quoted from 162 to 190 per dollar. The naira fell 12 percent against the dollar this quarter, the worst among 24 African currencies tracked by Bloomberg after Malawi’s kwacha.
The central bank later updated the circular to say the change was temporary.
“Banks have to sell all dollars they buy from the market, not to keep them until the following day,” Deputy Central Bank of Nigeria Governor Sarah Alade said by phone from Abuja. “It is to ensure dollar liquidity. We have noticed some dealers speculating on the currency because of the pressure from declining oil prices.”
The currency weakened less than 0.1 percent to 187 per dollar.
The central bank raised interest rates to a record 13 percent last month to protect the currency and its foreign reserves, down 19 percent this year, while Finance Minister Ngozi Okonjo-Iweala proposed an 8 percent budget cut yesterday.
Aberdeen Asset Management cut its naira holdings completely over the last two months and has no immediate plans to re-enter the market as the currency could fall further, Daly said.
“I’m happy to sit on the sidelines and wait to see it go higher against the dollar,” he said. “We’re getting to 200 quicker than I expected. But if someone called me right now and said they’d offer me 200” naira for each dollar, “I’d say no,” Daly said.
“Banks have to sell all dollars they buy from the market, not to keep them until the following day,” Deputy Central Bank of Nigeria Governor Sarah Alade said by phone from Abuja. “It is to ensure dollar liquidity. We have noticed some dealers speculating on the currency because of the pressure from declining oil prices.”
The currency weakened less than 0.1 percent to 187 per dollar.
The central bank raised interest rates to a record 13 percent last month to protect the currency and its foreign reserves, down 19 percent this year, while Finance Minister Ngozi Okonjo-Iweala proposed an 8 percent budget cut yesterday.
Aberdeen Asset Management cut its naira holdings completely over the last two months and has no immediate plans to re-enter the market as the currency could fall further, Daly said.
“I’m happy to sit on the sidelines and wait to see it go higher against the dollar,” he said. “We’re getting to 200 quicker than I expected. But if someone called me right now and said they’d offer me 200” naira for each dollar, “I’d say no,” Daly said.
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