In mid August the governor of the Central Bank of Nigeria (CBN) announced plans to remove two zeros from the naira. This policy would have required banks handling letter of credit (L/C) business to open special accounts to cover transactions opened under the old denomination and settled under the redenominated currency.

But by the end of the month the CBN had said it was suspending its planned redenomination of the naira after Nigeria's President Umaru Yar'Adua said the bank had wrongly announced the policy without his prior approval.

L/C implications

According to the CBN governor's earlier statement, certain external obligations such as L/Cs would have had to be settled from cash drawn from 'Special Domiciliary Accounts'.

Now it appears that special arrangements for L/Cs will not have to be made, for the time being at least.

Humble pie

In the bank's first official comment since Yar'Adua's rebuke on 25 August, Soludo said the CBN accepted the president's authority in matters relating to the denomination of the currency.

"The bank accepts Mr President's decision to suspend the implementation of the redenomination aspect of the Strategic Agenda for the Naira," Soludo said.

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