Deposit Money Banks have asked customers to submit bids ahead of the start of new interbank foreign exchange trading today.
The Central Bank of Nigeria had on Wednesday announced plans to begin market-driven trading of the naira to alleviate chronic foreign exchange shortages.
Banks asking customers to submit bids is a signal that the new forex trading platform will be driven by market forces and not dominated by internal bank trading.
After a meeting with the CBN officials and banks’ chief executive officers late on Friday, banks asked their clients to send them pending Letters of Credit for them to resubmit and to quote a rate at which they want to buy dollars, Reuters reported quoting its source said.
Customers had so far submitted bids between N210 and N290 to the dollar, the source said.
“I got a memo from my bank yesterday asking us to contact all our customers with pending LCs to resubmit their LCs and say at what rate they would want to buy the dollars,” the source said.
“Liquidity will likely return to the market because central bank will now sell its dollars at higher rates.”
The CBN has pegged the naira rate at 197 to the dollar for the past 16 months after a slump in oil revenues hammered public finances and its foreign reserves.
But the naira trades at around 355 on the parallel market.
A Reuters poll found that analysts expect that when the naira floats freely on Monday it will trade at 275 to 300 per dollar.
There is a $4bn backlog of demand in the market which could take three to four weeks to clear, the central bank has said.
Banks will set the first exchange rate of the naira versus the dollar when the local currency is allowed to float freely after the CBN abandoned its dollar peg, bankers have said.
The average rate at which the market clears the demand will become the new exchange rate, according to the banking source