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

ABUJA: 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 currency quote platform ABOKIFX 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, which is registered in Britain, earlier told Reuters that it had not been contacted by the central bank or its Nigerian banks over any investigation.

Nigeria central bank worried about FX supply not naira valuation

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.

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 maintain rates steady, 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% after the pace of food price growth slowed.

"MPC expressed delight at the robust recovery of output growth during the second quarter and continued decline in inflation in August 2021," Emefiele said.