- sells $150 mln at currency forward
By Odunewu Segun
The Central Bank of Nigeria will let the market determine the naira’s rate in a new foreign-exchange window for portfolio investors as the nation struggles to revive its economy amid a dollar shortage, National Daily has gathered.
Speaking with top senior bankers at the weekend, Governor of the Central Bank of Nigeria, Godwin Emefiele, was quoted to have said that he would tolerate the naira weakening in the window, which started today, April 24.
While that may cause the currency to depreciate to its black-market level, the CBN probably won’t devalue the interbank exchange rate, a source said, declining to be identified because he wasn’t authorized to speak publicly.
Isaac Okorafor, a spokesman for the CBN, didn’t answer calls to his mobile or immediately respond to a text message.
The naira has traded at around 315 per dollar on the interbank, or spot, market since August. The black-market rate plummeted to a record 520 against the greenback in February, but recovered to 390 after the central bank sold $3 billion to $4 billion in forward contracts and on the spot market.
Three-month non-deliverable forward contracts on the naira rose 1.3 percent to 356.6 per dollar at 12:58 p.m. in Lagos, the highest on a closing basis since March 6, suggesting traders see the currency’s weakening about 12 percent in that period. Six-month contracts rose 1.5 percent to 377.5.
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The president of Nigeria’s Association of Bureau De Change said its group has already commenced consultations with some foreign investors with a view to increase dollar supply in the parallel segment of the market.
Aminu Gwadabe said retail currency bureaus are trying to attract more foreign capital with the cooperation of the central bank, to boost dollar liquidity and provide support for the local currency.
Meanwhile, the apex bank will offer $150 million in currency forwards at an auction today, April 24, part of its efforts to narrow the spread between official and black market exchange rates and improve foreign exchange liquidity.
Traders, citing a notice from the CBN, said settlement will be between one week and 45 days. The sale will be through a wholesale auction to meet the forex demand from businesses.
The CBN has been intervening on the official market to try to narrow the currency’s spread with the black market rate. It has sold around $4 billion since intervention began in February, analysts say, a pace they doubt it can sustain.
On the official market, the currency was quoted at 306 per dollar, while it was quoted at 381 per dollar.