Nigeria’s Central Bank has moved to douse fears of the emergence of a cartel in the new foreign exchange market, declaring the door open to ALL banks
to be Foreign Exchange Primary Dealer (FXPD).
In a revised set of guidelines released on Friday, the CBN has now thrown the door open to other commercial banks in Nigeria to participate even if they do not meet the criteria for the choice of 10.
Meanwhile the parallel market traders are reported to be holding back on their FX trades as the streets of Lagos panic at what the new FX policy will bring in next Monday.
Traders have refused to buy USD / GBP / EUR and those willing to buy off customers are buying low volumes at much lower rates, to hedge against any price fluctuation expected next week.
While some traders are willing to sell at a lower price than yesterday’s close, most have declined to take on additional forex and some refused to sell that which they hold, in case the market reverses.
With various speculations on what price CBN will trade at next week, the market is now in panic mode and traders are gradually reducing trading act ivies till next week.
CBN’s weekly intervention fund that hits the market on Thursdays was held back yesterday which created further panic, as there now is no official guide to the rate setting in the parallel market.
Wide spreads are beginning to emerge in locations where traders are willing to trade and abokiFX believes this will persist all through the weekend.
Analtst on AbokiFX believe new market rates will be introduced next week once CBN opens its single currency market trade but the volume of FX that CBN will trade on the day, will also be a key driver of the new market rates we expect to see.