The lingering dispute between Central Bank of Nigeria (CBN) and eight banks banned from participating in the inter-bank foreign exchange market, has bashed the local currency, Naira, depreciating to N415 per dollar yesterday in the parallel market.
This has however resulted to a total weekly loss of N20 per dollar. But the inter-bank market registered moderate stability as mid-day trading rate hovered at N315/USD1 after depreciating to N316.
The developments were coming against the inability of eight out of the nine banks banned from the interbank market failed to resolve the issues with the apex bank and the Nigerian National Petroleum Corporation (NNPC) over the weekend.
The affected banks are First Bank of Nigeria Plc; First City Monumental Bank (FCMB) Plc; Diamond Bank Plc, Skye Bank Plc, Heritage Bank Limited, Keystone Bank Limited, Fidelity Bank Plc and Sterling Bank Plc.
Chief executives of the banks have been meeting with the apex bank since Wednesday up till yesterday but no solution was reached as it was learnt that CBN was insisting the banks should return the NNPC foreign exchange deposits to the Treasury Single Account (TSA) before they could be allowed to return to the market.
Consequently, pressures continued to build against the Naira exchange rate with the local currency depreciating against all major international currencies at the weekend.
The naira had reversed its four-day straight gains on Tuesday after the ban was announced, but banks’ forex dealers, however, disclosed that the renewed pressure on the local currency had more to do with scarcity than the ban placed on some banks.
They also said that many dealers and buyers were speculating that the apex bank was showing some desperation in controlling access to foreign exchange and weakening its intervention with supply of foreign exchange to the market, a situation which has driven negative sentiments in the market.
Parallel market dealers corroborated the scarcity concern, noting that though they do not have demand pressure, the supply was also not coming in as the banks have not been fulfilling the directives of the CBN to sell to Bureau de Changes (BDCs).
They explained that the initial moderation in rates last week when CBN gave the directive has given way to further apprehension when the banks refused to comply fully. But amidst these, CBN was able to settle the USD152.48 million of Naira futures contracts it sold in two months ago which matured on Thursday at an exchange rate of N279/ USD1.
CBN also executed a fresh 12-month contract at N241/ USD1 which is scheduled to mature on August 16, 2017.
The apex bank, on Tuesday, suspended the banks from forex transactions for failing to remit money they received from NNPC into the TSA.