December 16, 2015

Naira hits new low at unofficial market



Nigeria’s naira fell 1.5 percent to a new low of 265 to the dollar on the unofficial market on Wednesday after the central bank rationed dollar supplies this week, traders said.

Counterfeit nairaThe bank cut the amount it sold to each of the 2,270 retail money exchange brokers that participated in Wednesday’s weekly sale to $10,000, down from the $30,000 each it sold last week, Aminu Gwadabe, the head of Nigeria’s bureaux de change (BDCs) association told Reuters.

It offered $84.5 million at a similar sale two weeks ago.

Plunging oil revenues, which make up 90 percent of Nigeria’s foreign currency earnings and more than half of government income, have hit public finances and the naira. Businesses are struggling to access dollars as the central bank rations the greenback to save reserves.

“There is dollar scarcity right now … the central bank has shrunk supplies despite increasing the number of BDCs at its window,” Gwadabe said.

The central bank this month asked all bureaux de change operators to submit accounts showing their dollar usage at the start of each week before they can access future sales, a move traders say was aimed at curbing speculation.

On Friday, the bank issued a circular which, among other things, invited retail money exchange agents to also consider obtaining dollars from private sources to fund personal and business travel, its latest attempt to conserve its dwindling reserves.

But it added that individuals wishing to sell more than $10,000 will be required to disclose the source of the funds, tightening the rules around bureaux de change operations in an economy already suffering from a sharp fall in oil prices since mid-2014.