Muhammad Bello in Abuja and Obinna Chima with
agency report

With the price of crude oil heading south and the country’s foreign reserves under pressure, the Central Bank of Nigeria (CBN) yesterday banned the sale of dollars at its Retail Dutch Auction System (RDAS) to importers of telecoms equipment, power generators and finished products.

Others affected by the ban include importers of
electronics, finished products, invisible transactions
business and information technology.
However, they can source their foreign exchange
requirements from the interbank market and dealers.

Owing to the directive, the naira hit a new intra-day
low in almost five years to N170.05 against the dollar yesterday, falling 1.87 per cent as the stock market continued to slide, Reuters reported.

In a circular titled, Exclusion of Some Transactions
from the RDAS Window, posted on its website
yesterday, the CBN said: “This is to inform all
authorised dealers and the general public that in
order to maintain the existing stability in the foreign exchange market and to further strengthen the various measures already initiated by the Central Bank of Nigeria, the importation of the following items shall henceforth be funded from the interbank foreign exchange market only: electronics, finished products, information technology, generators, telecommunications equipment, invisible transactions.”

In another circular, the central bank also said it had
observed that banks and discount houses now have a preference for keeping their idle balances in its
Standing Deposit Facility (SDF), thereby constraining the process of financial intermediation.
In order to encourage banks to increase lending to
the productive sector of the economy, the regulator
therefore announced a review on the guidelines for
the operations of the SDF.

Specifically, it stated that “the remunerable daily
placements by banks and discount houses at the SDF shall not exceed N7.5 billion. This shall be
remunerated at the SDF rate of 10 per cent per
annum.
“Any deposit by a bank and discount house in excess of N7.5 billion shall not be remunerated. These provisions are without prejudice to the subsisting Monetary Policy Rate (MPR) corridor.
“For the avoidance of doubt, the SDF remains as a
monetary policy tool.”

According to the banking sector regulator, the MPR
corridor remains +/- 200 basis points, that is 10 per
cent per annum up to the limit of N7.5 billion.
Reacting to the CBN’s directive on the diversion of
demand from CBN’s official foreign exchange window to the interbank market, a market analyst, who preferred not to be named, said: “The objective of this policy decision is to reduce pressure on foreign exchange reserves.

“In October, the CBN used 10 per cent of its foreign
exchange reserves to intervene in the foreign
exchange market. The last time the CBN used such a large share of foreign exchange reserves, in a month, to intervene was in the second half of 2011 and the central bank devalued the NGN by 5 per cent in November 2011.”

He said the policy decision confirmed that the CBN
could not afford to keep intervening in the foreign
exchange market to defend the official target
exchange rate of NGN150 +/-3%, at the rate it has
been doing in recent weeks, especially in a depressed oil price environment.
“In enacting this policy, the CBN must have expected the interbank exchange rate to weaken. Which makes me wonder if this policy decision is a tacit devaluation” he said.

On the second directive by the central bank, which
capped banks’ deposits that earn interest, he termed the move negative for the naira.
“I think this is negative for the naira, because it will
result in banks diverting funds to treasury bills,
which will put further downward pressure on yields
and make them less attractive to foreign investors.”
The market analyst said the fact that both policy
decisions were naira-negative, was evident from the
depreciation of the naira to its weakest level,
NGN171.82/$1, where after it retraced to about
NGN170/$1.
“I believe the central bank must have anticipated
further naira weakness, and widening in the gap
between the official and interbank exchange.
“It is for this reason, I believe this may possibly be a
tacit devaluation, or at least a precursor to an explicit one that may be announced at the November 25 MPC meeting,” he explained.

He added that the implication of the policies adopted by the CBN was that the rate of inflation would rise and could have adverse consequences on consumer stocks.

The stock market also remained bearish in
yesterday’s trading, as major company stocks
depreciated further, with Nestle leading the losers'
chart with a N47.5 loss, to close at N883.
Forte Oil slumped from N208 to N194, while Dangote Cement, the biggest stock in the market, lost N10.4 to close the day at N198.

WAPCO fell to its lowest price of N80 in four years,
after shedding N8.73, Nigeria Breweries also took a
hit to N143.45 having lost N7.55, while Unilever
closed at N29.80, slipping down from N31.35.
Market capitalisation sank to N11.425 trillion, losing
N475 billion from N11.9 trillion at the close of trading the previous day.

www.thisdaylive.com/articles/cbn-restricts-dollar-sales-as-naira-sinks-below-n170/193422/

Soon, naira go be 200 naira to one dollar.....

Naira has been transformed...

Don't mind them, dey wan spoil market for Yahoo Boyz!

Cutehector4u:
Soon, naira go be 200 naira to one dollar.....

I see trouble ahead for the Nigerian economy.

This shall put the final nail on JonaTAN administration.
Now I know that Sanusi tried...
Jona must just go

msmon:
Don't mind them, dey wan spoil market for Yahoo Boyz!

hahaha

Probably, Sanusi tried.

Keneking:
This shall put the final nail on JonaTAN administration.
Now I know that Sanusi tried...
Jona must just go

this is a breath of fresh air!!!!

Good news for travelers, bad news for yahoo boys.

APC is to blame-GEJ

Una "sufferness" just dey starts. 1983 is back. The exact replica of shagari's hapless "come and chop" regime. It is not surprising that the players( praise-singers and actors) are the same.

Austerity 2.0 coming .
You and not the corrupt FG , are going to pay for it.

I believe CBN may be the reason we are still not fully using Paypal.

Yesterday, the Nigerian equities market hit a 5-year low at the loss of 4.7 basis points, today Naira took the worst dip in value 5years and the South ward movement in the price of our major foreign exchange earner appears unabated! !!As noble as the policy of CBN is, the timing is not appropriate. Things can soon spiral out of hands and we have Greece scenario on our hands seems.Henceforth, the policy makers should be more careful about the consequences of ill-timed policies. We should pay more attention to the timing, political and ecobomic implications of our fiscal policies.

Valid! 100000000000 likes

bizlifelines:
Yesterday, the Nigerian equities market hit a 5-year low at the loss of 4.7 basis points, today Naira took the worst dip in value 5years and the South ward movement in the price of our major foreign exchange earner appears unabated! !!As noble as the policy of CBN is, the timing is not appropriate. Things can soon spiral out of hands and we have Greece scenario on our hands seems.Henceforth, the policy makers should be more careful about the consequences of ill-timed policies. We should pay more attention to the timing, political and ecobomic implications of our fiscal policies.

msmon:
Valid! 100000000000 likes

you want the nigerian economy to crash?
i thought you were advocating for the poor and the helpless.
little did i know you are prancing around for an evil sinister motive.

I don't mean that, I only validate the guy's point of view.

tit:


you want the nigerian economy to crash?
i thought you were advocating for the poor and the helpless.
little did i know you are prancing around for an evil sinister motive.

This kind of news will not enter frontpage o, instead we will be seeing "My Man Has Two Cars, I Trek Around, Isn't This Selfisness"? Mstcheeew

The government is ruing the economy

Can someone explain this article. I really don't get the gist

I wander oooooo.

Chylo:
This kind of news will not enter frontpage o, instead we will be seeing "My Man Has Two Cars, I Trek Around, Isn't This Selfisness"? Mstcheeew

msmon:
I wander oooooo.

How will it enter frontpage when it paints this administration black.

msmon:
Probably, Sanusi tried.

Remove the probably, Sanusi actually tried.

GEJ fresh air tho. . It's like getting fresh air in a slum.. smelly air

If it was news on Wizkid play like on stage half naked, it will be on FP by now and we would have been counting several pages of comment. This make me fear for this country, it's not Seun or any of the moderators fault, they are doing the best for the business. This is not a news that will generate so much traffic I guess though it's very enlighten but the business is all about traffic.

politricks:
How will it enter frontpage when it paints this administration black.