Nigeria’s central bank has collected 216 billion naira ($598 mln) from banks with excess cash holdings as part of measures to support the naira currency, leading to a spike in money market rates, bankers said on Friday.
The naira has come under intense pressure as lockdowns to try to contain the COVID-19 pandemic have led to a sharp fall in the price of oil – Nigeria’s main export – and as foreign investors have departed, causing a large financing gap.
The currency has been hitting new lows on the over-the-counter spot and black markets since March after the central bank adjusted its official rate, implying a 15% devaluation, to absorb the impact of an oil price crash.
The naira traded at 385 on the official market this week, weaker than a quoted rate of 361, backed by the central bank.
Banking sources told Reuters the liquidity withdrawal came before a foreign currency auction on Friday.
Results of the auction were due later in the day.
Money market rates spiked up to 20% on Friday following the debit, from just under 3% the previous session, bankers said.
“The central bank is trying to manage the FX rate using the CRR (cash reserve ratio),” one banker said, adding the debits had become frequent and over the 27.5% limit.
He said offshore lenders were the most affected by the levies since they don’t operate retail business and are debited from their corporate deposits or borrowings.
The bank is selling forex to importers and individuals with dollar expenses to keep its economy afloat. But it has yet to resume forex sales to investors that have sold assets and need to leave the country. (Reuters)