Nigerian banks give more access to forex as dollar liquidity improves

Nigerian banks are now comfortable selling the naira currency at around 360-380 per dollar to consumers as increased dollar inflow from independent sources gave them more access to hard currency to meet their customer's needs, traders said on Monday.
Confident of improved liquidity in the forex market, some commercial lenders are now encouraging their customers with local denominated credit cards to have increased access to the dollar at 380 to the dollar unlike what obtained in the past.
In the wake of the dollar shortages last year, many Nigerian banks stopped customers from using their local denominated currency credit card from accessing dollar to prevent exchange rate crisis.
Traders said in spite of the improved dollar liquidity in the market, banks are comfortable to offer the dollar to consumers at a premium above the official rate to edge against any exchange rate loss.
"Many banks feel they are comfortable selling at that level so that they won't replenish at an adverse rate and also not cut off with any exchange rate exposure," a senior currency trader told Reuters.
Although the naira is stuck at around 305.90 on the official interbank market, a level it has remained at since August last year, the currency was quoted at 365.96 a dollar on the investor window, while some banks are offering credit card users at between 375-380 per dollar.
The naira was quoted at 367 to the dollar on the black market on Monday.
But traders said dollar inflow has since improved through the investors and exporters foreign exchange window and this has helped stabilised rates at the current level and provided the ability to access dollars to meet customers' needs.
"Dollar liquidity has improved since the creation of the investor and exporter window because the market has been allowed to trade freely," one currency trader said.
The window, where buyers and sellers are free to agree on an exchange rate, was introduced in April to try to attract foreign investors into the country and boost the supply of dollars.
Two weeks ago, more than $3.83 billion has been traded on the window since it was established by the central bank on April 24, boosting banks ability to access foreign exchange to meet the need of their customers.
The Central bank has also reduced the frequency of its intervention at the interbank foreign exchange market in recent time because of the improved liquidity in the system, another trader said.
"The central bank has largely reduced its intervention in the foreign exchange market, especially the investor window as a result of the increase dollar inflow through the window," a senior currency trader told Reuters.
Before the window was introduced, the central bank was the main supplier of hard currency on the interbank forex market, after foreign investors fled naira assets in the wake of an oil price slump in 2014.
Last month, the central bank spokesman said the bank was responsible for around thirty percent of trading in the investor market, but traders said the market can now stand on its own as liquidity has improved tremendously.
"When it started out the investor forex window, the central bank did a bit of intervention, but now the market, buyers, and sellers are doing their thing without the central bank intervening anymore," a banker said.