May 24, 2024
Nigeria Bans Naira Street Trading as Battered Currency Takes Another Hit
, Bloomberg News
(Bloomberg) -- Nigeria stepped up efforts to curb speculation against the battered naira, slapping tough new conditions on bureau de change and banning street trading in foreign currency.
The Central Bank of Nigeria sharply increased capital requirements for the nation’s BDCs, citing the need to regulate the sector and ensure it isn’t undermining the value of the local currency.
“Street trading of foreign currencies is not allowed,” said Blaise Ijebor, CBN director for risk management. “We don’t want BDCs under the trees. They should be in offices, you walk into their office, change your currency and walk away,” he told a conference in Lagos on Thursday.
The naira weakened 1.6% to 1,486 per dollar on Thursday, according to the latest available data on the website of the FMDQ, which tracks the trade. It changed hands at 1,515 naira per dollar in street trading Friday, said Abubakar Muhammed, chief executive of Forward Marketing Bureau de Change Ltd.
The central bank lifted capital requirements for tier one BDCs that operate nationally to 2 billion naira ($1.4 million) from 35 million naira, and to 500 million naira for tier two BDCs who are located in only one of the county’s 36 states. The industry has six months to comply.
The BDC’s umbrella organization has asked the authorities to lower the new thresholds and grant them more time.
The move follows a planned ban on person-to-person cryptocurrency trading in the naira, part of a wider clampdown on crypto platforms which Nigerian authorities blame for exacerbating volatility in the local currency. It has slipped around 68% in value against the dollar since foreign exchange rules were eased last year.
Nigeria has taken specific aim at Binance Holdings Ltd., the world’s largest cryptocurrency exchange, detaining two of the company’s executives while they were visiting the country in February.
One escaped. But the other has been in jail since April and faces charges alongside Binance that include complicity in aiding customers to evade taxes via its platform.
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