LAGOS, JULY 18, 2017 – Improved foreign exchange supply for Nigerian banks are the major reason for the increased dollar spending limits for payment cards that are denominated in local currency, Bloomberg reports.
The country’s biggest bank by market value, Guaranty Trust Bank, raised the maximum amount a holder of its naira Mastercard can spend abroad in a month to $1,000 from $100, in line with “the relative improvement in foreign-exchange liquidity in the market,’’ Meksley Nwagboh, a spokesman for the lender said Monday in an emailed response to questions.
On the same vein, Ecobank Transnational Inc. had also raised their limit to the same amount while the First City Monument Bank (FCMB) Group will implement its on increase to a new spending limit of $500 per month this week according their officials.
This upward turn of financial policies put an end to the suspension of foreign payments using Naira cards in 2015 and 2016 following the decline of the production and prices of crude oil, the country’s main export.
However, the Central Bank’s creation of a market-determined foreign-exchange trading window for investors and exporters in April increased access to dollars and enabled banks such as GTB to increase its spending limit while improving the dollar liquidity of banks like Ecobank, Bloomberg reports.
This, has consequently put the banks in a stronger position to boost foreign exchange payments nationwide says Tunde Kuponiyi, Ecobank’s head of consumer banking.
This was further confirmed by the London-based Exotix Capital in a note released to clients on the 14th of July which said in part, “The change in the withdrawal limit is another signal that banks are less concerned about foreign exchange liquidity than before,’’
The naira was quoted at 365.08 per dollar in the new Nigerian Autonomous Foreign Exchange market on Monday. It traded at 324.50 naira per dollar as of 3:38 p.m. on Monday in the interbank market and 367 naira in the street market from a peak of 520 naira per dollar in February.