CBN Weakens Naira Marginally on Spot Market

Nigeria’s central bank sold dollars at 306 naira for the second time on Tuesday after maintaining a level around 305 naira on the official spot market for two months, traders said.

The move was minor, to signal a change in foreign exchange policy, traders said. The bank last sold dollars at 306 naira on the spot market in September and had sold the currency as low as 306.65 in July.

Dollar shortages gripped Africa’s biggest economy as crude sales, Nigeria’s mainstay, plunged at the start of an oil price rout in 2014. That triggered a recession last year and frustrated businesses, which had to find dollars on the black market as a result.

To try to resolve the currency crisis, the OPEC member state has set up at least different six exchange rates, after devaluing the currency for retail users in February and allowing foreign investors to trade the naira at market-determined rates.

Subsequently, the bank has been intervening with dollar sales almost daily on the spot and forward markets. It sold $500,000 on the spot market on Tuesday, traders told Reuters.

It has also been tightening naira liquidity on the money market to keep treasury yields high and attract foreign inflows.

The naira was quoted at around 360 for investors, near the parallel market rate and at a level at which it has traded for more than a month.