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UPDATE 3-Nigeria levies $598 mln from banks via cash ratio debit ahead of FX auction

Published 19/06/2020, 12:15
Updated 19/06/2020, 18:36
© Reuters.

(Adds money market rates)
By Chijioke Ohuocha
ABUJA, June 19 (Reuters) - 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.
The central bank did not respond to a request for comment.
($1 = 361.00 naira)

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