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Nigeria’s Top Court Orders Central Bank to Halt its Removal of Old High-denomination Banknotes

The Supreme Court decided that the Central Bank of Nigeria’s plan to discontinue the use of old bills by Feb. 10 was unconstitutional. The judges ruled that the notes should remain in circulation until the end of the year. The yield on Nigeria’s 2032-dollar bonds fell 16 basis points to 12.47% earlier Friday and the notes retained their gains after the ruling was announced. The central bank’s project to replace 200, 500 and 1,000 naira notes that started on Dec. 15 has disrupted everyday life in Africa’s most populous nation, where only 60% of households have access to a bank account, because of a shortage of new bills. Snaking queues are now a common sight outside ATMs and bank branches, while common tasks such as riding the bus or buying food have become an ordeal. Private-sector activity last month contracted for the first time in almost three years as companies reduced output and cut jobs because of the scarcity. The central bank’s implementation of the measures “has come under significant scrutiny,” said Joseph Nnanna, chief economist at the Development Bank of Nigeria Plc. The court’s decision could open a “slippery slope which will erode the apex bank’s independence,” he said.