Nigeria’s central bank has indicated that it would offer about $100 million at a special foreign currency auction this week, as part of its efforts to improve dollar liquidity and reduce pressure on the local currency, the naira.
The regulator specifically said the dollar auction would be both for spot and forward deals, which would be settled within the next 60 days.
In a notice to banks and dealers, the CBN reinforced its determination to provide liquidity at the foreign exchange market. Only last week it said it would continue to intervene in the foreign exchange market to support the naira.
The central bank has been intervening on the official market in the last few months to try to narrow the spread between rates on the official market and the parallel market, often referred to as the black market. So far it has sold over $5 billion in the foreign exchange market, with the new Investor & Exporters forex window getting as much $2.2 billion since April when it was introduced.
Nigeria has multiple 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.
The naira was quoted at 371.41 on the investors’ window >NAFEXD=FMDQ> on
Monday, it traded at 368 on the black market >NGNFX=BDCN> and traded at around 305.75 to the dollar on the official window on Friday.