By Chijioke Ohuocha
LAGOS May 8 The Nigerian naira traded at about
400 to the dollar in deals for investors on Monday, traders told
Reuters, two weeks after the central bank allowed investor trade
in the currency at market-determined rates.
Trading sources said investors were demanding rates above
400 naira per dollar while locals were quoting rates as low as
The sources said traders held a conference call last Friday
with market regulator FMDQ OTC Securities Exchange to discuss
the wide range of quotes on the naira for investors, although
the meeting did not produce any resolutions.
FMDQ provides daily opening and closing quotes on the naira.
Traders, worried about illiquidity in the currency market
despite making the exchange rate market-determined for
investors, said no resolution was reached at the meeting.
"We have done deals around 400 levels," one trader said.
"Some of the offshores are insisting on 400."
The central bank said in April it would allow investors to
trade the naira at market-determined rates, a move intended to
improve the dollar supply and attract foreign investors who
bolted from Nigeria at the start of the latest currency crisis.
The move introduced yet another exchange rate to the five
existing ones. Still, analysts doubted it would enough to draw
more hard currencyinto Africa's biggest economy.
Investors have questioned the over-the-phone trading system
for lack of price discovery and transparency.
The bank says it has used the multiple exchange rate system
to eliminate "frivolous demand" for foreign currency but critics
disagree, saying that the convoluted system masks pressure on
the naira as the regulator tries to avoid a devaluation.
The central bank has been selling dollars aggressively on
the forward market with only tiny volumes on the spot market,
using those sales to influence the naira's official value in a
bid to narrow the currency spread with black market rates.
On Monday it offered $100 million in forwards.
The naira was quoted at 381.11 per dollar for investors on
Monday, data from FMDQ showed. The official market rate was
305.20 and the black market rate 391.
(Additional reporting by Sujata Rao in London; editing by Mark