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Nigeria tightens controls on foreign exchange

(FRANKS..)
Oil platform off the Nigerian coast

The Nigerian central bank has imposed new foreign exchange controls to try to stem the flow of dollars out of the country.
It means importers will not be able to get hard currency to buy a list of 40 items ranging from rice to cement.
The list includes Indian incense, plastic and rubber products, soap and even private jets.
It has also restricted access to the interbank currency market for the purchase of foreign currency bonds.
In April, the central bank limited the amount that Nigerians could spend on credit cards abroad.
The Nigerian currency, the naira, has plunged because of the fall in the oil price.
The central bank has spent $3.4bn propping it up since it fixed the exchange rate in February and tightened trading rules to curb speculation.

Black market

"We see this policy move as confirmation that foreign exchange supply remains extremely tight. But more worryingly, it suggests that the central bank remains reluctant to devalue the naira," said Yvonne Mhango, sub-Saharan Africa economist at Renaissance Capital.
The central bank has said in the past that devaluing the naira by allowing it to float freely on the currency markets is not an option.
The naira, which was trading at 198.50 to the dollar on the interbank market, was reported to be trading close to 220 on the black market in the commercial capital, Lagos, on Wednesday.
Analysts said the latest measures meant importers would increasingly turn to the black market to buy dollars.
Cobus de Hart of South Africa's NKC Africa Economics said: "The decision to, in effect, introduce additional capital controls does not bode well in relation to investor perception and may also adversely affect domestic business operations and costs."

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