ABUJA Feb 21 Nigeria's central bank took a step
nearer to outright devaluation of the naira currency on Tuesday,
providing 23 commercial banks with a combined $370.8 million at
forward exchange rates up to 15 percent weaker than the official
On Monday, the central bank effectively devalued the local
currency for private individuals, who account for about 20
percent of total foreign exchange demand in the country.
On Tuesday, it said it sold dollars using one- and two-month
forward exchange rates to commercial banks whose bids ranged
from 315 naira to 360 naira per dollar, up to 15 percent weaker
than the official rate of 305 naira that commercial importers
Forward exchange rates are rates at which banks agree to
exchange one currency for another at a future date.
Selling the dollars at new one- and two-month forward rates
may set expectations for the central bank to allow the naira to
trade at a weaker level in the future, after the government had
kept it at an artificially strong value according to critics.
Banks bought $216.5 million in one-month forwards, and
$154.3 million in two-month forwards, said the central bank.
Nigeria's dollar supply has been throttled by foreign
currency restraints and low exports of crude oil. The government
devalued the naira last June but still kept it at just over 300
to the dollar - as much as 40 percent stronger than black market
rates in the following months.
Despite calls from businesses and economists, the government
had refused to take steps to devalue the naira further until
now, while President Muhammadu Buhari, a staunch opponent of
devaluation, has been on medical leave in Britain for over a
On Monday, Nigeria weakened the naira rate for private
individuals days after a top advisory body demanded an urgent
review at a meeting chaired by Vice President Yemi Osinbajo, who
is currently acting president.
It was Osinbajo who unveiled the idea of a more flexible
exchange rate last year, also while Buhari was on medical leave,
leading to a 30 percent devaluation weeks later.
In Tuesday's statement, the central bank said it had offered
$500 million to banks, "but not all of them provided enough
naira backing to pay fully for their respective bid amounts".
The central bank said it was "more than ever ready to
support the inter-bank market by ensuring liquidity and
transparency to guarantee efficiency in the Forex market."
(Reporting by Camillus Eboh; Additional reporting by Chijioke
Ohuocha and Ulf Laessing in Lagos; Writing by Paul Carsten;
Editing by Hugh Lawson)