• Sunday, July 14, 2024
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BusinessDay

CBN reviews banks’ daily foreign currency trading position

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…as naira gains over dollar at inter-bank market
The Central Bank of Nigeria (CBN) on Monday reviewed the daily foreign currency trading position of banks with immediate effect.
Consequently, authorised dealers are required to maintain 0.1 percent as maximum open limit of shareholders fund (SHF) unimpaired by losses as foreign currency trading position at close of each business day.
In a circular signed by Ahuchogu O.L. for director, trade and exchange department, CBN, banks are required to utilise funds purchase from the autonomous/inter-bank foreign exchange market within 72 hours from the value date, failing which such funds must be returned to the CBN for repurchase at the bank’s buying rate.
At the inter-bank foreign exchange market, naira gained N1.00k/$ against the US dollar following the sale of dollars by the CBN and oil companies.
The CBN on Monday offered a total of $200 million but a total of $240 million was sold to some deposit money banks at the rate of N168/$ at the twice Retail Dutch Auction System (RDAS).
Also, dealers said China’s Addax and Italy’s Eni sold a combined $19 million while LNG sold an undisclosed amount of dollars to commercial lenders, Reuters said in its report.
Consequently, after trading on Monday the local currency closed at N182.10k/$ compared to N183.10k/$ traded on Friday last week, according to data from Financial Markets Dealers Quotations (FMDQ).
The central bank devalued the naira two months ago and in December tightened trading rules to try to curb speculation against the currency, slowing trading to a trickle. The naira had been hard hit by falling oil prices, cutting foreign income for Africa’s largest crude producer.
The devaluation of its target band by 8 percent to N160-N176 against the dollar was meant to halt the slide in foreign reserves, but the naira has traded well outside that band – and reserves are still falling.