CBN holds Dollar Forwards Auction as Currency Crisis Deepens

Nigeria's central bank will sell two-month dollar forwards at an auction on Friday to clear a backlog of demand from airlines, manufacturers and other companies, traders and the ministry of transport said, as the country's currency crisis deepens.

Dollar shortages have caused many firms to halt operations and lay off workers, compounding an economic crisis exacerbated by the fall in global prices for oil, which accounts for 70 percent of Nigeria's budget revenue.

The central bank has struggled to support the local currency as its dollar reserves have dropped to more than an 11-year low of $24.2 billion. Traders say the naira has been testing new lows as they try to find thresholds where liquidity can begin to return.

Traders said that in Friday's one-off special auction, the central bank will debit customers' naira accounts on the day but deliver the dollars in two months' time. Bid rates will be published after the auction, they said.

"This important one-off exercise is dedicated to the clearance of the backlog of matured foreign exchange obligations," the ministry of transportation said in a statement.