(Adds naira firms after central bank FX sale)
By Oludare Mayowa and Chijioke Ohuocha
LAGOS, April 10 Nigeria's central bank plans to
sell shorter-dated dollar forwards to inject liquidity into the
official market and try to support the naira, traders said on
The local currency has weakened on both the official and
black markets. The naira fell to 328.50 on the official market
on Monday but later gained some ground to close at 306.15 after
the central bank intervened. However, it slid past 400 naira on
the black market.
"In the weeks ahead the (central bank) will sustain its
intervention," spokesman Isaac Okorafor said in a statement.
"The bank will sell short tenured forwards ... to meet
demand of manufacturers and all other foreign exchange users,"
he said, adding the bank was striving to achieve exchange rate
On Monday, traders said the bank will auction $100 million
to be settled between one week and 30 days, as against sixty-day
contracts it had written previously.
The bank auctioned $418 million at 310 naira on Friday to
airlines, agricultural firms, petroleum and raw material
importers in addition to $350 million it sold last week to
individuals with certain foreign expenses, it said.
Nigeria is battling a currency crisis brought on by low oil
prices, which has tipped its economy into recession, hammered
its dollar reserves and created chronic dollar shortages,
frustrating businesses and individuals.
It now has at least five exchange rates - the official one,
the black market, a rate for Muslim pilgrims going to Saudi
Arabia, a retail rate set by licensed exchange bureaux and a
rate for foreign travel, school and medical fees.
The multiple exchange policy has masked the pressure the
currency is under and made it difficult to attract inflows as
investors struggle to price naira assets, analysts say.
The central bank, opposed to a free naira float, has been
selling the U.S. currency on the official currency market to try
to narrow the spread with the black market rate after the black
market rate hit a record high of 520 in February.
It has since devalued the naira for consumers to 375 and has
been intervening selling more than $1 billion in forward
currency sales since February.
Last week the International Monetary Fund (IMF) said the
naira was overvalued by around 10 to 20 percent, and called for
changes to Nigeria's exchange rate policy.
(Writing by Chijioke Ohuocha; Editing by Toby Chopra and Janet