Central Bank Of Nigeria limits forex sales to foreign firms

Oct 16,2011 – Central Bank Of Nigeria limits forex sales to foreign firms

In a further measure to limit local foreign exchange demand and support the weakening Naira, the Central Bank of Nigeria (CBN) said, on Friday, that it will restrict the sale of dollars at its auctions to foreign companies taking the currency offshore.

The CBN disclosed this in a circular sent to banks in the country. It said foreign investors were guaranteed to repatriate their earnings and proceeds of investments offshore but they could only seek dollars for such purposes from the open market, limiting forex demand at its auction.

The circular read: “All remittances in respect of dividends, capital and proceeds of investments shall be through the use of autonomous funds.”

Meanwhile, trading at the forex interbank market halted on Thursday, due to a dollar shortage, after the Nigerian National Petroleum Corporation (NNPC) sold dollars meant for lenders to the Central Bank of Nigeria (CBN) according to dealers.

According to them, the market had expected around $700 million from the NNPC, to boost Dollar liquidity at the interbank, but instead the corporation sold the Dollars to CBN.

Dealers had expected the unit to close firmly at the auction rate on Thursday, instead interbank market weakened to N160.70 on thin volumes at mid-day.