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Nigeria's central bank keeps rates steady, targets illegal FX dealers

09/18/2021 | 02:00am EDT
Nigeria's Central Bank Governor Godwin Emefiele briefis the media during the MPC meeting in Abuja

ABUJA (Reuters) - Nigeria's central bank kept its benchmark interest rate unchanged at 11.5% on Friday, its governor said, adding that the bank would seek to flush out illegal dealers in the foreign exchange market.

The Nigerian naira has been hitting new lows on the unofficial market following central bank actions to channel demand for dollars towards official platforms.

Governor Godwin Emefiele said that as part of the bank's bid to crack down on illegal currency trading, its investigations had shown that online currency quote platform AbokiFx https://abokifx.com was being used to manipulate forex rates.

"The bank thus maintains its resolve to continue to restructure the foreign exchange rate market and will pursue all recent policies aimed at sanitising the market to improve transparency and proper functioning and eliminate illegal FX dealers," Emefiele said.

AbokiFx said on Friday it has suspended the publication of black market rates on the naira after the central bank accused it of forex manipulation. It added that Friday's record-low black-market rate of 570 per dollar is its last quoted rate.

Nigeria has several exchange rates operating in parallel, a system put in place during a 2016 oil price crash because the government was seeking to avoid a large official devaluation of the naira as a matter of national pride.

The central bank has adjusted the currency three times since March 2020, but it has continued to weaken due dollar shortages. The naira traded at 410.50 per dollar on the official spot market on Friday, within a range it has been since June.

Africa's biggest economy, Nigeria is under pressure from foreign lenders, including the World Bank, to reform its foreign exchange management system and bring together its multiple exchange rates.

Emefiele said decelerating inflation and the continued recovery of the economy had convinced the central bank to keep rates on hold, a position supported by all members of the monetary policy committee.

Nigeria's annual inflation eased in August for a fifth straight month to 17.01% while its economy expanded by 5% in the second quarter, after growing for three consecutive quarters to June 30, to escape recession in 2020.

(Reporting by Chijioke Ohuocha; Writing by MacDonald Dzirutwe; Editing by Marguerita Choy)

By Chijioke Ohuocha

© Reuters 2021
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