LAGOS, JULY 3, 2017 – The central bank of Nigeria said it will sell $100 million at a special foreign currency auction on Monday, the latest in a series of interventions that it said had yielded positive results in the forex market.
In a notice to commercial lenders, the regulator said the dollar auction would be both for spot and forward transactions which would be settled within the next 60 days.
The central bank has been intervening on the official market in the last few months in an attempt to narrow the spread between rates on the official market and black market. It has sold more than $5 billion since February.
Central bank deputy governor Joseph Nnanna said the relative stability in the foreign exchange market was as a result of the increase in the OPEC member country’s oil output and the bank’s forex policy.
Nigeria has at least six different exchange rates including a retail rate set by licensed exchange bureaus, the official and black market rates and a window for investors where the naira can be traded at rates set freely between buyers and sellers.
Nnanna sought the retention of the forex policy and its multiple windows to ensure stability in the market in his presentation at the meeting of the bank’s monetary policy committee (MPC) meeting to set interest rates in May.
“In my opinion the current exchange rate policy regime including all the access windows to foreign exchange should be retained,” He noted in his statement at the MPC meeting, details of which were published at the weekend.
Nigeria is battling a currency crisis brought on by low oil prices, which has tipped Africa’s biggest economy into recession and created chronic dollar shortages.
Nigerian authorities want to attract foreign investors and at the same time maintain a strong currency to ward off inflation.
The naira was quoted flat at 368 on the black market on Monday and quoted by commercial lenders at the interbank window at 306.40 per dollar.
The local currency was quoted at 366.41 on the investors’ window on Friday.