As Naira came under fresh pressures in the parallel market Wednesday, the Central Bank of Nigeria, CBN, issued more directives restricting usage of domiciliary accounts by bank customers, apparently to stem the pressures and improve official supply of foreign exchange to the interbank market.
As a result of the pressure, Naira crashed to between N460 and N465/ USD1, against the opening rate of N445/USD1 in the parallel market segment, though the interbank rate depreciated just marginally to N312.9/ USD1, against N310 earlier in the week.
Currency dealers at both segments of the market attributed the renewed pressure on rates to a worsening supply gap at all the segments, even as CBN’s intervention, according to them, has become too thin to assuage the huge demand.
One of the dealers in a commercial bank said: “CBN may have started finding it difficult to intervene with significant supply of foreign currency to the interbank market.
“On the other hand we have been having increased demand from our customers but we are unable to source their requirements for some weeks now.”
Against the backdrop of the huge supply and demand gap, CBN appeared to have renewed its restriction measures on access and usage of independent foreign exchange resources.
Yesterday, some bank customers said they had received messages from their banks warning them to desist from using foreign exchange inflows in their domiciliary accounts for trading purposes.
The directives, according to a source in a bank, came against the emergence of a thriving currency trade by some individuals with their domiciliary accounts.
An e-mail from one of the banks stated that CBN had mandated that all customers of financial institutions were expected to utilize their accounts within regulatory guidelines.
According to the e-mail, the guidelines stated: “All customers of financial institutions are expected to only use their accounts for their direct personal/company related transactions.
“No customer of any financial institution is permitted to engage in any activity that could be perceived as international money remittance service (IMTO) or bureau de change (BDC) activities without the express approval of the CBN.
“Any customer who fails to adhere to these guidelines runs the risk of being reported not only to the CBN but subsequently to the security agencies.’’
The bank, in the same e-mail, encouraged customers to be mindful of these directives when using their bank accounts, adding that it would continue to provide updates regarding the proper use of domiciliary bank accounts.
Worried by these developments, a financial analyst at CardinalStone Partners Limited, a Lagos-based investment house, Tiffany Adugwe, said that the primary cause of the adversities and pressures on exchange rate was the increasing supply gaps.
She stated: “There is no liquidity yet in the foreign exchange market and the situation is worsening. We need emergency borrowings, foreign exchange inflows as soon as yesterday.
“The forex is not available at the interbank market and that is why the demands are going into the parallel market and hence the rate there is shooting up.”