* Currency hits record low after central bank announcement
* Allows banks to accept dollar deposits, reversing policy
* Analyst says shows lean towards market-determined FX
(Adds context, analyst quote)
By Camillus Eboh and Julia Payne
ABUJA, Jan 11 Nigeria's central bank is halting
dollar sales to non-bank foreign exchange operators and letting
commercial banks accept dollar deposits with immediate effect,
its governor said on Monday, in an effort to shore up dwindling
Africa's biggest economy, an OPEC member state that depends
on oil sales for about 95 percent of its foreign reserves, has
been hammered by a collapse in global oil prices, which has
triggered a slide in its naira currency.
Godwin Emefiele said the sale of foreign exchange to bureaux
de change would be discontinued because they were using up the
country's foreign reserves for illegal transactions and selling
the dollar at 250 naira compared to the official central bank
rate of 197 naira.
The currency hit a record low of 282 per dollar on the
unofficial market on Monday after the central bank's
Emefiele said foreign reserves stood at around $28 billion
compared with $37 billion in June 2014, and that the bureaux
were depleting them at a rate of $28.4 million per week.
"This is a huge haemorrhage on our scarce foreign exchange
reserves, and cannot continue," Emefiele told a news conference
in the capital Abuja.
The decision to allow commercial banks to accept cash
deposits of foreign currency reverses the restriction imposed
last year when such deposits were banned to curb currency
It comes days after a visit by the head of the International
Monetary Fund, Christine Lagarde, when she told lawmakers that
the IMF did not support foreign exchange restrictions.
"By curbing the official sale of foreign exchange (FX) to
BDCs, the CBN is probably signalling its tolerance for at least
a segment of the FX market to be more market-determined, with
the exchange rate based on demand and supply," Razia Khan, head
of Africa Research for Standard Chartered bank, said.
"The move to allow commercial banks to accept U.S. dollar
deposits may also be a step towards a liberalisation."
Nigeria is facing its worst economic crisis in years as it
must import most of what it consumes due to limited
Emefiele said monthly foreign earnings had plummeted as low
as $1 billion from highs of $3.2 billion while demand for
foreign exchange has risen sharply over the past decade.
"The last time we had oil prices at about $50 per barrel for
an extended period of time was in 2005. At that time, our
average import bill was 148.3 billion naira per month ... Our
average import bill for the first nine months of 2015 is 917.6
billion naira," he said.
To avoid devaluing the currency, a stance so far supported
by President Muhammadu Buhari, the central bank adopted
increasingly stringent foreign exchange rules last year and
effectively banned dollar access for the purchase of 41 items,
which has also been criticised at the World Trade Organisation
by the United States and the European Union.
Alan Cameron, economist at Exotix, said the decision "looks
like an effort to draw volumes back to the more tightly
regulated official market".
"(It) will be difficult to establish confidence in the
official rate. At the same time, any with access to hard
currency will have a strong incentive to channel them through
the parallel market."
(Additional reporting by Chijioke Ohuocha; Editing by Alison