Nigeria’s commercial banks will set the first exchange rate of the naira
versus the dollar when the currency is allowed to float freely on
Monday after the central bank abandoned its dollar peg, a senior banking
source said on Friday.
On Wednesday, the central bank said it
would float the national currency on Monday, but it has given few
details on how the new rules will be implemented.
In their first
detailed guidance, central bank officials told bank chief executives at a
meeting on Friday that lenders would set the first naira rate to the
dollar based on demand without intervention from the central bank, one
senior banking official told Reuters.
A central bank source said
that Governor Godwin Emefiele was at the meeting and confirmed that
commercial banks will determine the market rate on Monday.
The
central bank officials also told the bankers it did not commit itself to
clearing up a backlog of hard currency estimated at around $4 billion
but will intervene if needed, the banking official said.
He also
said the central bank would open up licenses for primary market dealers
beyond the initial target of eight to 10 participants that it had
announced on Wednesday.
Bid-offer spreads for trading would be
set at one naira, and banks are required to publish their buy and sell
rates on a daily basis, the banking source said. The central bank will
the evaluate performance of the new regime by December, he added.
Primary
dealers can handle volumes of $5 million between themselves as the
standard order size and can trade up to $1 million with any other
dealer, the source said.
The central bank could not be immediately reached for comment.