The Central Bank of Nigeria will offer $150 million in currency forwards at an auction on Monday, part of its efforts to narrow the spread between official and black market exchange rates and improve foreign exchange liquidity.
Traders, citing a notice from the central bank, said settlement will be between one week and 45 days. The sale will be through a wholesale auction to meet the forex demand from businesses.
The central bank has been intervening on the official market to try to narrow the currency’s spread with the black market rate. It has sold around $4 billion since intervention began in February, analysts say, a pace they doubt it can sustain.
In a circular cited by Reuters on Monday, the bank also said it will now allow investors to engage in foreign exchange trading at rates the buyers and sellers set, a move it hopes will increase the amount of dollars available in Africa’s biggest economy.
The president of Nigeria’s association of bureau de change said its group has already commenced consultations with some foreign investors with a view to increase dollar supply in the parallel segment of the market.
Aminu Gwadabe said retail currency bureaus are trying to attract more foreign capital with the cooperation of the central bank, to boost dollar liquidity and provide support for the local currency.
On the official market, the currency was quoted at 306 per dollar, while it was quoted at 381 per dollar.