Naira Falls on Black Market as Nigeria Curtails Dollar Sales

  • Currency 24% weaker in unregulated trading than official rate
  • Money changers say central bank cut foreign-exchange supply

The naira weakened to a record in unregulated trading on Friday as money changers said the Central Bank of Nigeria reduced the amount of dollars it made available to them.

The black-market rate, used by exchange bureaus in Africa’s largest economy, depreciated 5.8 percent to 260 per dollar compared with its level on Monday, according to Aminu Gwadabe, president of the Lagos-based Association of Bureau de Change Operators of Nigeria. That’s 24 percent weaker than the official rate of 198.52 per dollar as of 12:56 p.m. in Lagos.

Only about 1,200 of 3,000 currency-exchange operators received the amount of dollars they requested from the central bank last week, Gwadabe said by phone from Lagos. “From what we see, the central bank is still unable to meet majority demand,” he said.

Two calls to the mobile phone of the bank’s spokesman, Ibrahim Mu’azu, didn’t connect when Bloomberg sought comment.

Under Pressure

Policy makers are under pressure to devalue the naira after this year’s 32 percent plunge in oil, which accounts for about 70 percent of government revenue, contributed to the 14 percent slide in Nigeria’s reserves in 2015 to $29.6 billion. The nation’s official exchange rate has been kept at 198-199 per dollar since March after the central bank restricted the ability of lenders to buy foreign currency.

In June, the monetary authority stopped importers of about 40 items, including wheelbarrows and glass, from obtaining dollars.

The Abuja-based central bank will further tighten rules on retail dollar sales, according to a circular dated Nov. 30 and posted on its website Friday. It ordered that from Jan. 1, persons selling the U.S. currency in amounts of more than $10,000 to a foeign-exchange bureau must disclose the source, while bureaus are banned from transacting business outside their registered offices.

Worsen Scarcity

“Definitely, the naira is in trouble with these tight rules,” Gwadabe said. “It will worsen the scarcity” of dollars, he said

Money changers met with the central bank on Dec. 8 to “discuss the difficulties in ensuring availability of dollars,” Gwadabe said. While policy makers “agreed to make more dollars available” to reduce tension, they have yet to do so, he said.

(Updates with tighter foreign-currency rules from seventh paragraph)

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