CBN to sell $100m at a special market auction, sold $5 billion since February

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[CBN]–Nigeria’s central bank plans to sell $100 million at a special foreign currency auction on Monday, the bank said as part of its efforts to improve dollar liquidity and reduce pressure on the local naira currency.

According to Reuters, in a notice to commercial lenders, the regulator said the dollar auction would be both for spot and forward deals which would be settled within the next 60 days.

Nigeria is battling a currency crisis brought on by low oil prices, which has tipped its economy into recession and created chronic dollar shortages. Africa’s biggest economy wants to attract foreign investors and at same time maintain a strong currency to ward off inflation.

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 black market and it has sold over $5 billion since February.

Last week the bank said it would continue to intervene in the foreign exchange market to support the naira.

Nigeria has at least six different 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 on Monday.

The local currency traded at 368 on the black market and traded at around 305.75 to the dollar on the official window on Friday.

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