* Graphic of official naira rate bit.ly/2pFO2NW
(Adds analysts comment)
By Chijioke Ohuocha
LAGOS, April 20 Nigeria's naira shot firmer on
the country's black market on Thursday as traders prepared for
the central bank to increase the dollar supply to exchange
bureaux to keep the official retail rate higher.
The black market rate strengthened 2.6 percent to 385 naira
to the dollar.
The central bank plans to sell $20,000 each to bureaux de
change operators on Thursday, the operators' association
president, Aminu Gwadabe, told Reuters. It sold $20,000 each
earlier this week to boost liquidity.
The bank has sold around $4 billion since it started its
aggressive intervention on the currency market in February,
analysts say, doubting whether it could sustain the trend.
"Until we see a freely traded naira a la Egypt, Nigeria is
fighting with one hand tied behind its back," said Aly-Khan
Satchu, head of Nairobi-based Rich Management.
The central bank, opposed to a naira float, has been
intervening on the official market to try to narrow the
currency's spread with the black market rate. On the official
market, the currency was quoted at 306 per dollar.
The spread has become far narrower thanks to central bank
intervention. It was 520 to the dollar on the black market in
February after the bank devalued the naira for retail customers
February's move effectively created multiple exchange rates,
including official, black market and one to pay for foreign
Finance Minister Kemi Adeosun said liquidity was improving
on the currency markets on dollar injection, thanks to rising
oil prices, adding that government was harmonising fiscal,
monetary and trade policies to boost growth.
"Higher oil prices alone are insufficient to explain the
central bank's aggressive interventions over the past few weeks
and (oil) production seems to have ramped up slowly over the
first quarter of this year," said Cobus de Hart, senior
economist at NKC in Johannesburg.
"Whether the central bank used funding such as external debt
related inflows to intervene in the forex market remains to be
seen, but in general we are not convinced that the regulator
will be able to sustain this trend indefinitely."
Nigeria has raised a total of $1.5 billion in Eurobonds in
the first quarter of this year.
Gwadabe said the increase in currency sales to exchange
bureaux would help take out pressure from the black market,
adding that some importers were no longer bringing forward
dollar demand as liquidity continues to improve.
On Tuesday, the bank cut the amount of paperwork small and
medium-size businesses must provide to buy dollars, also among
to improve liquidity and attract them away from the black
(Additional reporting by Oludare Mayowa; Editing by Jeremy