Nigeria, Belarus Halt All FX Trading As Central Bank Urges "Don't Panic"

Tyler Durden's picture

Just because Russia has managed to stabilize its currency for the time being as crude tries to find a floor, that certainly does not mean the soaring dollar tantrum-cum-crude crash episode is anywhere near over, nor that stability has returned to the rest of the oil-exporting countries. Case in point, crude-exporting powerhouse Nigeria, where things are going from worse to #REF!

As Bloomberg reported yesterday, the temporary Russian FX-trading halt appears to have inspired all other nations with plunging currencies (the Nigeria Naira just hit a new record low against the dollar in recent trade), and as a result Nigerian FX dealers halted trading after a central bank rule change meant to "limit speculation" against the plunging naira confused investors. “This raises concerns about the credibility of the central bank,” Kevin Daly, senior portfolio manager at Aberdeen Asset Management Plc, said by phone from London. “If it was their intention to stabilize or see some appreciation of the naira, it’s backfired.”

Bid and ask prices for the naira were quoted from 162 to 190 per dollar with only 16 trades by 1 p.m. in Lagos [yesterday], compared with more than 170 by the same time yesterday, according to data compiled by Bloomberg. The naira fell 12 percent against the dollar this quarter, the worst among 24 African currencies tracked by Bloomberg after Malawi’s kwacha. Investors dropped Nigerian assets as the outlook for Africa’s biggest oil producer worsened with Brent crude prices almost halving since late June.

This is how you implement currency controls like a true boss: "The Abuja-based regulator met currency traders about a circular issued on its website today that cut banks’ maximum foreign-exchange net-open position to zero of shareholder funds by the end of each business day from 1 percent. Interbank naira trading ground to a halt, according to Samir Gadio, head of African strategy at Standard Chartered Plc. The central bank later updated the circular to say the change was temporary."

“Banks have to sell all dollars they buy from the market, not to keep them until the following day,” Deputy Central Bank of Nigeria Governor Sarah Alade said by phone from Abuja. “It is to ensure dollar liquidity. We have noticed some dealers speculating on the currency because of the pressure from declining oil prices.”

Deputy Central Bank of Nigeria Governor Sarah Alade said,
“Banks have to sell all dollars they buy from the market,
not to keep them until the following day.”

But the punchline surely was Nigeria's central bank's advice to the public: Don't Panic.

Lenders will still be able to buy dollars on the interbank market if they have orders from customers needing to import goods and services, Gadio said. The central bank will continue to support the naira with sales of dollars in the interbank market, Alade said.

“The banks can’t stop trading because of the circular,” the Deputy Central Bank of Nigeria Governor Sarah Alade said. “It is not supposed to close the market. We have told them we’ll continue intervening in the market, so there is no need to panic.

Maybe there is:

To be sure, "don't panic" is the only code word investors need to hear to completely bug out:

Aberdeen Asset Management cut its naira holdings completely over the last two months and has no immediate plans to re-enter the market as the currency could fall further, Daly said.

 

“I’m happy to sit on the sidelines and wait to see it go higher against the dollar,” he said. “We’re getting to 200 quicker than I expected. But if someone called me right now and said they’d offer me 200” naira for each dollar, “I’d say no,” Daly said.

This was yesterday. Today the completely halt of FX trading continues: as Bloomberg commented earlier today, "the policy on retaining zero bank’s shareholders funds as FX trading position by close of business remains in effect."

* * *

And just in case there is confusion that the currency crisis is confined simply to energy exporters (as previewed here over a month ago), today the Belarus central bank shocked its own population when it also announced full-blown capital controls designed, releasing additional measures to stem the "negative trends of currency and financial markets " including raising mandatory sales of FX revenue to 0%, suspending all OTC FX trading (so pretty much all FX), introducing a 30% fee on all FX purchases, "recommending" that banks halt BYR lending until February, and sending 1-yr interest rates on liquidity operations with banks to a eyewatering 50% in hopes this leads to an increase in BYR deposit rates. It will. What it won't lead to is stabilization in the deposit market as the natives realize they too are next up on the hyperinflation train.

End result:

Full NBRB press release:

On Measures Taken by the Government and the National Bank with a View to Preventing Development of Negative Trends in the Financial Market

 

Having regard to the situation in the neighbouring states’ economies, primarily in the Russian Federation, the Government and the National Bank of the Republic of Belarus took a number of measures aimed at preventing the development of negative trends in the foreign exchange and financial markets of the Republic of Belarus and rising attractiveness of savings in Belarusian rubles.

 

The National Bank increased the interest rates on standing facilities and bilateral operations designed to support banks’ liquidity to 50% per annum. This measure, in turn, will result in the proportional increase in the rates on deposits in the national currency.

 

All major Belarusian banks should introduce a term guaranteed saving deposit with the mechanism of ruble savings indexation in case of the Belarusian ruble exchange rate changes. This measure will protect the savings in the national currency from the exchange rate risks and raise their attractiveness compared with the savings in foreign exchange.

 

Having regard to the increased demand for foreign exchange in the domestic foreign exchange market, it was resolved to introduce a temporary 30% fee for purchase of foreign exchange by legal and natural persons. Enterprises and banks will pay this fee when purchasing foreign exchange at the stock exchange; natural persons – in the form of commission when purchasing foreign exchange at banks. The paid funds will be directed to the budget.

 

At the same time, the approaches to setting up the exchange rate in the domestic market will remain unchanged. Any citizen may purchase and sell foreign exchange without any limitations; economic entities – at the Belarusian Currency and Stock Exchange. The operations involving purchasing/selling of foreign exchange by economic entities – residents of the Republic of Belarus in the over-the-counter foreign exchange market are temporarily suspended.

 

Besides, the norm of obligatory sale of foreign exchange proceeds inflowing to the country has been increased to 50% since December 19, 2014.
Along with the above-mentioned measures, the approaches to the monetary policy implementation has been tightened for the purpose of limiting money supply growth and increasing the "cost" of money.

 

In particular, the banks have been recommended to avoid the build-up of credit portfolio in Belarusian rubles till February 1, 2015 and not to change the currency of monetary obligations of the borrowers under credit agreements.

 

At the same time, it was resolved not to apply the supervisory response measures to banks for non-compliance with the requirements of Resolution of the Board of the National Bank of the Republic of Belarus No. 260 dated April 22, 2014 "On Maximum Amounts of Interest Rates on the Banks’ Operations Involving Provision of Monetary Funds (Credits) to the Legal Persons – Residents of the Republic of Belarus" from December 18, 2014 to January 1, 2015.

 

The above-mentioned measures will make it possible to raise the attractiveness of savings in Belarusian rubles, balance the foreign exchange market under the conditions of the increased demand for foreign exchange and avoid the growth of speculative expectations.

So as globalization goes into full reverse, and as major countries isolate themselves from global trade, clearly it's time to load up and fall back on that good ole' BTFATH mentality.

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Latina Lover's picture

Blowback from the USSA  screwing Russia by trashing her currency.

Arius's picture

as JPM "analyst" wisely noted a couple of days ago the rubble doesnt matter to US economy ... i guess it matters to the World ... dahhhh

never one cockroach stupido

Colonel Klink's picture

Jew York shitty is full of cockroaches, Wall street is particularly infested, as is Washington, District of Crime.

 

EDIT:  Merely pointing out the facts.  I wear the downvotes as a badge of courage to speak the truth.

Jeff the Terrible's picture
Jeff the Terrible (not verified) Colonel Klink Dec 19, 2014 9:37 AM

"And just in case there is confusion that the currency crisis is confined simply to energy exporters"

The key is to bolt the emergency doors shut

 

http://y2u.be/VI6tBwVjyOY

Stackers's picture

but their currencies are backed by their governments ?

kaiserhoff's picture

OK, I won't panic.

Run, Forest, Run!

boattrash's picture

Currencies crashing? Anybody seen Soros, Where the fuck is Soros?

Colonel Klink's picture

Hopefully in the Grim Reaper's clutches.

noben's picture

Colonel, cantju use the Z word instead?  That way, it give WW-Z a whole new meaning.

noben's picture
noben (not verified) Arius Dec 19, 2014 5:50 PM

In the real world, the Laws of Unintended Consequences can be very sneaky, fast and powerful.  Ditto when you combine the skills of CBs and Intel Agencies -- where the US is not alone in this, and now have good company/competition from Russia and China.  And maybe others. 

"Oh what a wicked web we weave, when first we practice to deceive" -Shakespeare

It occurs to me, that as Russia and its friends/allies are being targeted by the US (and their unwilling EU/NATO allies -- except for the UK, Canada and Australia who are very eager & willing lapdogs), that these two countries could be the Early Adopters of Russia's inter-national currency settlement alternative to SWIFT.  RIFT* as I have dubbed it.  RIFT puts a nice swift rift right up the rear end of the BIS, the Fed and all its public and hidden beneficiaries.

* Rapid International Financial Transfers

p.s. Still waiting for news (from RT or ZH) of results of the RIFT tests on Dec. 15, which coincided with the much noisier Black Monday.  Tick.  Tock.

glenlloyd's picture

central authorities keep using the term 'intervening' as though it was a good thing. Maybe you survive for a day or two but eventually it al catches up to you.

DaddyO's picture

Math, Bitchezzz...!

DaddyO

the not so mighty maximiza's picture

we are not use to getting hit back

Hazlitt's picture

"Don't panic; that's our job."

Colonel Klink's picture

"Deputy Central Bank of Nigeria Governor Sarah Alade"

I bet she's even a jew since she runs the Central bank of Nigeria.  Second only to Sammy Davis, Jr.

/sarc

highly debtful's picture

If I were a Nigerian banker and I would be called to deputy governor Sarah Alade's office, I'd probably wet myself there and then. She looks like a nasty piece of work. Not someone to discuss the particulars of FX trading with in a relaxed and congenial manner, it would seem.

Colonel Klink's picture

I haven't been contacted by a Nigerial banker but I have by a Nigerian prince.  He was going to make me rich if I sent him some money first.  Sounded like a lobbyist, politician, or broker.  I passed since few of those are ever honest or true.

highly debtful's picture

Well, Colonel, you are a bit paranoid aren't you? Remember how you once turned down my offer to become your business partner in "Klinkle", just because my name apparently did not inspire enough confidence? You've hurt my feelings there and you can always tell that Nigerian Prince to take his business to me. I'll become filthy rich, while you'll be full of spite and regret for the rest of your life!

Colonel Klink's picture

Is sorrwy I hurt your wittle fweelings. ;)

I'm as paranoid as a long tailed cat in a room full of rocking chairs.

Monty Burns's picture

Anyone who reaches a high position in Nigeria is a nasty piece of work.  Corrupt and useless.

Monty Burns's picture

Anyone who reaches a high position in Nigeria is a nasty piece of work.  Corrupt and useless.

SickDollar's picture

Bring it on Bitchez , after all it is Friday

 

it's a Big Club and you ain't in it BITCHEZ

Jeff the Terrible's picture
Jeff the Terrible (not verified) SickDollar Dec 19, 2014 10:36 AM

merca fyuck yeah

Bold Eagle's picture

"...including raising mandatory sales of FX revenue to 0". It's actually 50%. So, can you imaging being an exporter who needs FX to get raw materials? You have to sell 50% of your revenue to the state and if you need FX, feel free to buy it back for 30% more.  

sudzee's picture

New PM trading stops as of Sunday. Round and round she goes and where she stops only  central banks and GS knows. Should be an exciting 2 weeks. 

highly illogical's picture

Michelle is really letting herself go

BandGap's picture

Isn't that the woman who was accused of being a witch?

I guess Moochy fits the bill.

localizer's picture

Nigeria is the country to watch.. they (unlike a few other oil exporting countries) do not have a safety cushion.. Venezuela is also screwed with their $21bn reserves, but at least they don't have 174mln people.. 

asscannon101's picture

This just in: "Nigeria is not Belarus..."

vegas's picture

Anytime any Government official [at any level] tells you, "Not to panic", I can assure you it is defintiely time to panic and get the fuck out of Dodge City ASAP.

 

www.traderzoo.mobi

divingengineer's picture

Read an article a year or two back about a Mexican businessman working for an American Corp in Mexico City when Mexico devalued in the 70's. He and his wife were driving to Acapulco for the weekend when the presidente came on the radio assuring everyone that devaluing the peso was not going to happen, period.  

He came to a screeching halt, turned his car around, probably with his wife bitching the whole time, and returned to Mexico City.  He got on the phone and got permission from the US mother ship to convert all the Peso holdings into USD and saved the Corp from a 40% peso devaluation.  

The moral of his story was exactly what you just said, "when it gets serious, you have to lie", and they do.   

Monty Burns's picture

Nothing is confirmed as true untill it's been formally denied twice.

Lanka's picture

I know Sarah.  She sent me an email a few months ago, requesting some help in tranferring funds. 

alexcojones's picture

Its like a game of rock, paper, scissors.

Gold is the rock, and Putin is the scissors.

Toxx's picture

When somebody says "Don't panic", that is usually the perfect time to panic.

Bumbu Sauce's picture

Or two economies I couldn't care less about.

divingengineer's picture

This is coming apart even faster than it did in 2008.  Only this time it is the rest of the world, mostly EMs cracking up first.  The FED thinks it can insulate us from this, what they should be doing is preparing us for the race to devalue, but they're still pumping the market.  Can't see the train till its two feet from them.  

The monied class is going to have to accept higher interest rates and lower asset prices, tough shit, get used to it.  You have been like hogs at the trough for 20+ years now and you have almost all the free cash in the country. Game over, you won.

 Now, with consumer demand, energy demand, demand for useless plastic crap plunging, they stand there with a stupid look on their faces.  It's because we got no god damned money you idiots! You got it all, we have just enough to feed and house ourselves and nary a bit more.  

But by all means, legislate yourselves even more.  Sell your gold and buy equities- they're a great deal, you don't want to get priced out of the market forever!

I can't think of a bunch of bastards that deserve what's coming more than our cherished .01%.  They really are a national treasure.  

Monty Burns's picture

Delighted to see Nigeria in the shite.  Let's hope it gets worse before it gets better for the useless  thieving bastards.

By the way, whenever I'm told not to panic my first reaction is to stampede for the door.

Anunnaki's picture

http://m.strategic-culture.org/news/2014/12/22/capital-controls-global-e...

My economic prowess begins and ends with balancing my checkbook

So why don't more as opposed to moar countries go the Malaysian route?

And isnt ganging up on currencies like this acts of financial terrorism?

Not that i would ever agree with this of course. But wouldnt giving someone like George Soros a Hebraic Necktie send a message that countries wont sit idly by while one man and his minions or should that be minyans destroys a country's standard of living

That pansy Lemonheadovich Putin should wake up and realize that war has been declared against him for even thinking about de dollarizing