CBN sells $660m forwards to clear backlog of dollar demand

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LAGOS, FEBRUARY 1, 2017 – The Central bank of Nigeria has sold $660 million in three- and five- month currency forwards at an auction aimed at clearing a backlog of dollar demand, traders said on Wednesday.

Last Wednesday, the central bank had asked commercial lenders to bid in a special currency auction targeted at clearing backlog of dollar obligations of manufacturing, airlines, agriculture and petroleum sector.

Traders said the results of the auction was announced late Tuesday while payment for the dollar sales is due on Wednesday.

This is the first major dollar sales to the key sector by the central bank this year in a bid to spur growth and revive Africa’s biggest economy which slipped into recession last year due to currency crisis necessitated by drop in global oil prices.

Nigeria is in its first recession for 25 years, caused by the oil price drop which has cut the supply of dollars needed to fund imports.

The dollar shortage in the OPEC member, whose crude sales make up two thirds of government revenue, has caused many companies to halt operations and lay off workers, compounding the economic crisis.

The local currency is quoted at 498 to the dollar on the black market, same level since last week, while commercial lenders are quoting 314 to the dollar at the interbank market on Wednesday.

 

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