BUSINESS DAY
The Central Bank of Nigeria has scrutinised lenders and foreign exchange bureaus, marking the latest effort to ease a dollar shortage that has sapped the naira.
The Abuja-based Central Bank of Nigeria ordered Wema Bank Plc to stop foreign currency-secured naira loans – a practice it said drains dollar liquidity – according to instructions seen by Bloomberg.
It gave Wema Bank until Sept. 7 to comply.
A spokeswoman for Wema Bank didn’t immediately respond to calls seeking comment.
It has been trying to find ways to stem volatility in the naira, which has lost 40% in value since President Bola Tinubu announced currency reforms shortly after taking office on May 29.
Last week, it capped the rate at which forex bureaus can transact in the currency at plus-or-minus 2.5% of the official market-weighted average from the previous day.
It warned those who fail to obey its instructions will lose their licenses.
“What the central bank is trying to do is close as many opportunities for speculation and hoarding as possible so that people will bring out their dollars to the market,” said Ayodeji Dawodu, head of Africa sovereign and corporate credit research at BancTrust & Co. in London. “However, what they need to tackle is why people are hoarding and speculating, and that’s because of a lack of confidence in the central bank’s ability to support the naira with reserves,” he said.
The naira has suffered persistent volatility since Africa’s most populous nation eased foreign exchange controls as it sought to simplify its exchange rate regime and kick-start dollar flows.
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