Naira Rises Against Dollar

The naira, which had fallen sharply in the parallel market, staged a major recovery thursday, as it appreciated to a band of N225 to N230 to a dollar, compared to N240 to the dollar at which it sold in the last few weeks.

Forex dealers attributed the naira’s gain to excess supply of the greenback in the market, even as it looked like a lot of speculators would lose their shirts.

It was gathered from a reliable source that commercial banks that presently have dollars in excess of $1 billion in their vaults have started taking desperate measures to mitigate currency risk.

According to the source, as a result of the development, banks have been rejecting dollar deposits into domiciliary accounts, but customers are allowed to withdraw cash from their accounts.

“The reason the banks have too much cash is due to speculation and money laundering. A lot of people have been speculating against the naira and amassed so much cash. Then there are those who have been amassing dollars obtained illicitly and want to launder the money,

“So bank vaults are awash with dollars, largely driven by speculation and money laundering. The banks made it very clear that they want to get rid of the dollars in the system, so if you want to withdraw you can, but you cannot pay in dollars into your domiciliary account,” the source explained.

Confirming the development, an official of the Central Bank of Nigeria (CBN) said the banks even offered the dollars to the central bank and sought its assistance to help them to wire the funds overseas, which the CBN rejected.

Following the rejection, the banks were left with no option than to stop accepting dollar deposits from customers, hence the sharp depreciation of the dollar to the naira in the informal forex market.