Banks Reject Dollar Deposits to Curb Speculation

Commercial lenders have stopped accepting cash deposits in dollars, in a move to discourage speculation on the naira currency, two banks said on yesterday.
“Banks no longer accept dollar cash due to large speculation on the currency,” the chief executive of First City Monument Bank, Ladi Balogun, told a conference call. Lenders will continue to receive dollar transfers from other banks, he said.
His comments were confirmed by another Nigerian lender, which asked not to be identified.
“We are constrained due to the current influx of foreign exchange cash deposits we have been receiving in recent times, and the lack of available foreign exchange (forex) cash outlets, to stop receiving FX cash deposits,” that bank told Reuters.
Central Bank Governor Godwin Emefiele last week said the naira, which has lost around 15 per cent against the dollar over the past year, with an official devaluation in November and a de facto one in February, was “appropriately priced” at its current level of N197 to the dollar on the interbank market.
The naira has weakened on the parallel market, falling as low as N242, on persistent dollar shortages after the central bank last month limited importers’ access to dollars, in order to save its reserves.
Early this month, the central bank fixed the spread at which bureaux de change operators can sell dollars to individuals, and has also limited the amount bank customers can spend using their debits cards abroad.
Although the restrictions have angered investors and frustrated companies that need dollars for imports, Emefiele has rejected the idea of loosening the curbs, saying the central bank could not adopt an “indeterminate policy” of currency depreciation.
Global ratings agency Standards & Poor’s has said Nigeria will have to devalue its currency at some stage, possibly by more than 15 per cent, though it saw the adjustments as likely to be gradual.
FCMB’s Balogun said the parallel market was beginning to see a reversal in the naira’s weakness as banks stopped taking dollars deposits. 

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