Nigerian banks barred from forex market, seek truce
Nine Nigerian lenders banned this week from foreign exchange trading for failing to remit some oil money into a government account are holding talks with the Central Bank of Nigeria, CBN, to seek a truce, operators said Thursday.
The CBN, on Tuesday
suspended nine banks for withholding $2.12 billion belonging to the Nigerian
National Petroleum Corporation, NNPC and the Nigeria Liquified Natural Gas, NLNG,
contrary to a government regulation, reports AFP.
"We have been meeting with CBN officials to find a way
out of the impasse because, if the crisis persists, it may have very dire
consequences on the financial system," a top executive at one of the
affected banks said.
He said the ban might trigger "a run on the banks"
as concerned customers withdraw their deposits.
"Customers may think the suspension is a signal of
distress and may rush to take out their money," he said.
Nigeria's oil-dependent economy is in recession because of
low oil prices and resulting foreign currency shortages, hammering government
revenue and pushing inflation to an 11-year-high of 16.5 percent in June.
The administration of President Mohammadu Buhari, who took
office in May last year, ordered all government revenues to be paid into
Treasury Single Account, TSA, in the CBN to prevent fraud, and in his fight
against corruption.
The United Bank for Africa, UBA, one of the suspended banks,
said its ban had been lifted after it remitted $530 million.
"We are pleased to inform our valued customers,
stakeholders and business partners as well as the general public that the CBN
has re-admitted us into the Foreign Exchange Market following our remittance of
all NNPC/NLNG dollar deposits," spokesman Charles Aigbe said in a
statement.
Financial experts want the regulators to be lenient with the
banks.
"We should not kill an ant with a sledge-hammer.
Banning nine banks from the forex market at this time of recession will worsen
the situation," Pascal Odibo said, warning the ban would deny importers
and forex users the opportunity to obtain forex through erring banks, ramping
up pressure on the black market.
"The implication is that everybody will go to the
parallel market to source for forex and this will continue to push up the
rate," warned Odibo, who suggested fines rather than a ban which Wednesday
pushed banking stocks down.
Currency traders said the naira depreciated further on the
black market following the suspension, crossing the 400 mark to trade at 402 on
Wednesday from 396 Tuesday.
The official rate is 305 to the dollar on the official inter-bank
market.
The CBN floated the naira in June by scrapping the offically
pegged rate of 197/199 which had caused forex shortages and currency woes in
one of Africa's largest crude producers.
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