Central bank to step up dollar sales to boost Naira

Central Bank of Nigeria

Nigeria plans to sell $30,000 to each of more than 2,500 bureau de change operators on Friday, in a move to increase dollar liquidity, the central bank said on Tuesday.

The apex bank has been trying to narrow the gap at which the Naira, hard hit by the drop in oil prices, trades on the interbank market through its regular interventions and is also trying to curb speculation.

Over the last year, the bank has burned through 20 percent of its reserves, spending $28 million a day to defend the currency which has been under unrelenting pressure from a lack of petro-dollars.

By end-January, reserves stood at $34.28 billion.

The one-off intervention on Friday is in addition to its regular
auction every week. The bank doubled the amount it auctions to bureau de change agents to $30,000 last month.

The Naira was selling at 209 to the dollar in the parallel market operated by BDC agents on Tuesday, while the interbank market rate hit 190.08 Naira on thin trades.

At the BDC, documentation to buy dollars is less rigorous but the market usually sells in small lots, compared with the interbank which can transact over 100 million dollars a day.

The currency firmed marginally to close at 189.15 naira on the interbank market on Tuesday after the central bank intervened and two oil companies sold dollars. The naira closed at 189.25 on Monday.