Nigeria Pushes Traders to Book All Naira Deals as Currency Falls

LAGOS, Nigeria, Capital Markets in Africa: The Central Bank of Nigeria’s foreign-exchange trading platform has called on banks to disclose all their naira transactions, including those done with customers that weren’t previously booked, as the regulator eases its grip on the currency and tries to attract inflows.

Banks should “update all trades irrespective of the exchange rate,” the chief executive officer of Lagos-based FMDQ OTC Securities Exchange, Bola Onadele, said in an e-mail sent to dealers on July 21 and seen by Bloomberg. “The CBN is very interested in credible price formation for the spot foreign-exchange market. It is also imperative for price discovery and liquidity assessment of our market, which are key to activate foreign portfolio investment flows.”

Banks should publish all their so-called “off-line trades” on its trading system “within 30 minutes of execution of such transactions,” according to a separate e-mail sent to dealers by FMDQ on the same day. The naira fell 3.9 percent, the most since the devaluation, to 305.25 on July 22, the day after Onadele’s e-mails. It rose 2.9 percent to 296.75 by 2:38 p.m. in Lagos on Monday.

Nigeria has struggled to attract foreign money into its bond and equity markets since devaluing the naira by 30 percent on June 20, ending a 16-month peg of 197-199 per dollar, with investors concerned the central bank was still controlling the exchange rate. FMDQ started operations in 2013 and is chaired by Sarah Alade, deputy governor of the CBN.

Source: Bloomberg Business News