CBN to release more dollar to offset forex demand

The Central Bank of Nigeria said on Friday it would offer dollar forwards to offset a backlog of foreign exchange obligations for manufacturers, airlines and fuel importers.

Traders said the dollars would be sold directly to businesses and were strictly for matured letters of credit obligations related to specific sectors.

“Authorised dealers’ accounts with the central bank will be debited in full for the naira equivalent of the dollar bid amount on a spot basis,” the central bank said in a statement to commercial lenders.

“The central bank will settle the bids through forward settlements of 7 to 45 days,” added the bank. It did not specify the amount of dollars to be sold.

The central bank has been intervening on the official market to try to narrow the naira currency’s spread with the black market rate.

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The naira was quoted at 315 per dollar on the official market on Friday, and at 385 on the black market. It traded at 410 a week ago.

The central bank has sold around $4 billion since it started intervening in the currency market in February, say analysts, who have expressed doubts the cash injections can be sustained.

The bank on Tuesday reduced the amount of paperwork that small and medium-size businesses must provide to buy dollars as part of an effort to improve liquidity and attract them away from the black market.