(Adds ministry of transport, stanbic, naira and overnight
By Oludare Mayowa and Chijioke Ohuocha
LAGOS Oct 14 Nigeria's central bank will sell
two-month dollar forwards at an auction on Friday to clear a
backlog of demand from airlines, manufacturers and other
companies, traders and the ministry of transport said, as the
country's currency crisis deepens.
Dollar shortages have caused many firms to halt operations
and lay off workers, compounding an economic crisis exacerbated
by the fall in global prices for oil, which accounts for 70
percent of Nigeria's budget revenue.
The central bank has struggled to support the local currency
as its dollar reserves have dropped to more than an 11-year low
of $24.2 billion. Traders say the naira has been testing new
lows as they try to find thresholds where liquidity can begin to
Traders said that in Friday's one-off special auction, the
central bank will debit customers' naira accounts on the day but
deliver the dollars in two months' time. Bid rates will be
published after the auction, they said.
"This important one-off exercise is dedicated to the
clearance of the backlog of matured foreign exchange
obligations," the ministry of transportation said in a
Domestic and international airlines operating in Nigeria
have struggled with the plunge in the local currency that has
made their jet fuel bills in U.S. dollars ever more expensive
and also hurt their profitability as their passengers pay in
The country's first recession in more than two decades is
also squeezing profits.
Trading on the interbank has been slow due to the shortage
of dollars. On Friday there was no trade for more than four
hours after the open, with the currency then offered at 311
naira to the dollar in a single trade of $500,000 at 1211 GMT.
The naira closed at 305 per dollar.
The overnight lending market closed with no deals done at
all, as commercial lenders held onto the naira so they could
participate in the central bank dollar auction, traders said.
The currency was sold at 460 per dollar on the black market.
Traders say Friday's "special auction" rate may close higher
than the interbank rate.
In June, Nigeria scrapped its currency peg, hoping that the
overvalued naira's fall would attract investment into Africa's
biggest economy. After that, the central bank auctioned $3.5
billion on the forward market to clear a backlog of dollar
But four months on, the naira keeps falling while investors
stay away, leaving the central bank as the main supplier of
greenbacks. Many traders wonder how much further the local
currency can fall.
On Friday, Stanbic IBTC Bank, in a notice said it
will limit customers' use of naira debit and credit cards for
international transactions from next week on account of current
market conditions. Other lenders may follow.
(Additional reporting by Felix Onuah in Abuja; Editing by Hugh