Ngeria's
central bank scrapped its bi-weekly currency auctions on Wednesday and a market
body said it would sell dollars only at 198 naira, a move that amounts to a de
facto devaluation of the currency of Africa's biggest economy.
With
elections due in less than six weeks, the changes let the central bank rein in
its defence of the naira, on which it was spending more than $100 million a
day, while avoiding the politically unpalatable word "devaluation".
FMDQ, a
group comprising Nigeria's main commercial banks and the central bank, said
commercial banks had also been banned from re-selling central bank dollars
among themselves, another attempt to end speculation in the naira.
The
currency has lost more than 20 percent in the past three months as oil prices
collapsed and concern grew about political stability after the six-week
postponement of the Feb. 14 presidential elections. Nigeria is Africa's top oil
producer.
The scrapped
dollar auctions made up only 10 percent of all FX trade, and abandoning them
meant the central bank had effectively ditched its official 160-176/dollar
target band, said Segun Agbaje, chief executive of GT Bank and an FMDQ
director.
Under
new trading rules, banks will only be able to purchase foreign exchange if they
have a prior order from a corporate customer, such as a fuel importer or
foreign mobile phone company looking to repatriate profits or dividends.
Any
outstanding dollar demand at the end of each trading day would be met by the
central bank at 198, FMDQ vice chairman Jubril Aku told a news conference.
"Starting
from Friday, the interbank market is order-based -- essentially filling orders
of customers," he said.
In a
statement, the Central Bank of Nigeria (CBN) did not stipulate the level at
which it would sell dollars, but said it would continue to intervene "to
meet genuine/legitimate demands".
Its
reserves have dropped 25 percent over the last year to $33 billion, a rate of
depletion that most analysts said was unsustainable.
Reuters
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