| LAGOS, April 24
LAGOS, April 24 Nigeria's central bank will now
allow investors to engage in foreign exchange trading at rates
the buyers and sellers set, a move it hopes will increase the
amount of dollars available in Africa's biggest economy.
People or businesses who need dollars to repay loans, pay
dividends, repatriate capital or settle trade-related
obligations will be eligible for the new trading system,
according to central bank circular seen by Reuters on Monday.
Trading will take place by phone, at rates set by willing
sellers and willing buyers. The central bank will not provide
the funds, but it will step in to buy or sell to keep the market
Dollars have been in short supply in Nigeria since the price
of crude oil, the country's main source of hard currency,
plunged three years ago.
"The Central Bank of Nigeria, in a continuing effort to
deepen the foreign exchange market and accommodate all FX
obligations, hereby announces a special window for investors,
exporters," the bank said in the circular.
The purpose of this window is to boost liquidity in the FX
market and ensure timely execution and settlement for eligible
Nigeria has at least five exchange rates: the official rate,
the black market, a rate for Muslim pilgrims going to Saudi
Arabia, a retail rate set by licensed exchange bureaus and a
rate for foreign travel and school fees.
The central bank last year lifted a temporary peg on the
currency, but to protect its precariously low foreign reserves
it introduced a convoluted exchange rate system that sees
different buyers paying various rates for dollars.
The policy has masked pressures on the naira and stunted
hard currency inflows as investors struggle to price naira
assets, according to analysts.
The bank has been using the forward market to meet demand
for dollars, making only tiny volumes available on the spot
market and using those sales to influence the naira's official
It said FMDQ OTC Securities Exchange will poll buying and
selling rates to help with price discovery.
The naira was quoted at 306 to the dollar on the spot market
on Monday and 385 on the black market.
(Editing by Larry King)