Nigeria seeks to tame dollar, boost local currency.
Aug 12, 2015 The Nigerian government has banned cash deposits in dollars and other foreign currencies in a recent move to discourage speculation on the naira which has been on the downward trend following the fall in oil price.
Although wire transfers are still acceptable, the ban has led to several commercial banks capping or banning dollar deposits due to the unavailability of outlets that can absorb their cash.
Officials have confirmed that the move has seen the Naira gaining by 4.1 percent
An independent economic analyst in Lagos, Bismarck Rewane, had this to say:
“The currency values are targeted to be stabilized and you typically use either market forces or administrative tools or a combination of both. In most cases the most efficient way of maintaining the value of the currency… establishing the value of the currency and maintaining, is by using market forces. In this case we have market forces saying that the rate of exchange is 245 naira and we have the administrative policy saying that the rate of exchange is 199. Somewhere in the middle so many things have happened,”
Earlier in the year, the Central Bank of Nigeria released a policy to help stabilize the foreign exchange market; importers of some goods and services such as cosmetics, rice and furniture, were limited from accessing dollars on the official interbank market.
While this move has helped the country’s reserves, facilitated home grown industries and improved employment, many businessmen who do business in dollars say they have been affected negatively by the ban.
Bureau De Change owner, Abdulahi Abdulahi expressed his concern about handling hard cash because of security reasons.
“We’ve written to them and we are still waiting for the result to come out in our favour because we can’t keep buying dollars and keeping them in stock while we cannot lodge it into the account. You know, if you buy you are meant to sell and if we are keeping it, people are not coming to buy because they have no any other account to lodge it in, then it means it will remain with you,” Abdulahi said.