The Central Bank of Nigeria (CBN) has halted the sale of dollars to some categories of importers in order to save the naira from falling further.
The move is also meant to bring down the pressure on the naira amid falling oil prices and perceived dollarisation of the economy, according to industry analysts.
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.
Also, the CBN said it had also reviewed the guidelines for the operation of its Standing Deposit Facility in order to encourage banks and discount houses to lend to the productive sectors of the economy.
The central bank noted that banks and discount houses preferred keeping their idle balances at the CBN’s SDF, thereby constraining the process of financial intermediation.
Consequently, it has reduced the remunerable daily placements by banks and discount houses at the SDF to maximum of N7.5bn.
In a circular signed by its Director, Financial Markets, Mr. E. U Ukeje, the central bank said, “All deposits by a bank or discount house in excess of N7.5bn shall not be remunerated.”