Offshore funds in Nigeria offered on Wednesday to sell the dollar at close to its black market rate, traders told Reuters, worsening a liquidity lull on the foreign exchange market.
The funds, which shifted dollars into the market last week to buy naira treasury bills, offered to sell the U.S. currency at 365 naira, close to the black market rate of 367. Local banks were bidding to buy at just 359.
The naira was quoted at 305.85 on the official market.
Investor transactions totalled $102.75 million on Tuesday, down from $125 million on Monday and from $131 million on Friday, traders said, adding they expected Wednesday’s volume to be lower again.
Domestic buyers said they were expecting the local currency to firm as foreign funds piled into cheap naira assets.
In April, the central bank allowed investors to trade the naira at rates determined by the market.
The move was intended to improve dollar supply, but it introduced a new exchange rate on top of the five already gumming up Nigeria’s currency system.
Foreign investors sold dollars last week to participate at a treasury bill auction on Wednesday, leading to the debt being oversubscribed.
International investors were now waiting to see where currency rates would settle after the auction, traders said.