The Central Bank of Nigeria allowed eight of the suspended banks back into the inter-bank currency market today. The eight bank were suspended last week for failing to remit oil/gas dollar funds - approximately $2.3 billion - to the government's Treasury Single Account (TSA) in a timely manner.
Tokunbo Martins, director of the banking supervision department at the CBN, announced the news following a meeting between CEOs of the sanction banks and officials from both the CBN and the Chartered Institute of Bankers of Nigeria.
The agreement came after a repayment plan was presented by the affected bank to repay all outstanding dollar amounts back to the TSA.
Mrs. Martins explained in her statement:
“We have had engagements with the body of CEOs over a number of banks suspended from participation in foreign exchange market. I’m happy to say the ban has been lifted on the banks.”Last week, many of the sanctioned banks protested the ban, claiming that dollar shortages in the country created significant obstacles in converting naira denominated revenue deposits.
The CBN sanctions did not go unnoticed in the Nigerian Forex markets. The sanctions caused the Nigerian naira to weaken against the dollar significantly due to decreased liquidity. On August 23 - the day of the ban - the USD/NGN exchange rate spiked to an all-time high of 350, while black market rates went as high as 414 naira per dollar in Lagos.
On Monday, the forex market in Nigeria recorded an all-time high of $327 million in turnover - a staggering figure compared to the average daily volume of $50 million. The naira closed today at 315.25, with many traders expecting the dollar shortage in the country to worsen.