Central bank of Nigeria has curbed access to the interbank currency market for the purchase of foreign currency bonds as well as a range of goods to tighten liquidity and conserve reserves.

The bank said importers could no longer get hard currency from the interbank market to buy items such as rice, cement, private jets, other construction materials, plastic and rubber products, soap, cosmetics, furniture and Indian incense.

 Analysts said the latest measures risked diverting dollar demand to the black market, worsening perceptions about economic policy and delaying a decision to devalue the naira in the wake of weak oil prices.

“We see this policy move as confirmation that FX supply remains extremely tight. But more worryingly, it suggests that the central bank remains reluctant to devalue the naira,” said Yvonne Mhango, sub-Saharan Africa economist at Renaissance Capital.

The naira, which was trading at 198.50 on the interbank market, sold for 220 against the dollar at the black market in the commercial capital Lagos on Wednesday.

Currency and bond markets in Africa’s biggest economy have come under pressure since the price of oil, Nigeria’s main export, plunged. The central bank has spent $3.4 billion to prop up the naira since it fixed the exchange rate in February and tightened trading rules to curb speculation.

The central bank is due to hold a news conference at 1400 GMT in Abuja to discuss the new measures, a spokesman for the bank’s governor said.

Central bank officials met chief executives and treasurers from commercial lenders last week to discuss the impact of its policies on the foreign exchange market, but stopped short of announcing any decisions on how to make the naira more liquid.

 


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