LAGOS, JULY 10, 2017 – Nigeria’s currency window for investors and exporters has traded around $3.83 billion since it was established on April 24, traders said on Monday, with the naira trading more strongly than on the black market.
The window, where buyers and sellers are free to agree an exchange rate, was introduced in April to try to attract foreign investors into the country and boost the supply of dollars.
Traders said $407 million were traded last week compared with $354.8 million in the previous week, indicating a gradual return in investors’ confidence to the West African nation’s foreign exchange market.
“We have seen continuous improvement in dollar inflow into the market in recent time from offshore investors and this has also reflected in the volume of transactions at the equity market,” one currency trader told Reuters.
Before the window was introduced, the central bank was the main supplier of hard currency on the interbank forex market, after foreign investors fled naira assets in the wake of an oil price slump in 2014.
A central bank spokesman last month said the bank was, on average, responsible for less than thirty percent of trading in the investor market.
The window, however, has effectively introduced yet another exchange rate to the five already in operation. These include a retail rate set by licensed exchange bureaus, as well as official and black market rates.
At the forex window, market regulator FMDQ OTC Securities Exchange quoted the naira at 364.56 to the dollar on Monday, versus 367 to the dollar on the black market.
The local currency traded at about 520 to the dollar on the black market in February and at 400 in the forex window when it opened in April, with the two rates then starting to converge.
Commercial lenders quoted the naira at 306 to the dollar on Monday, the level they have been quoting for around the last two weeks.