Nigeria shortens FX settlement period as naira weakens


LAGOS, April 10  – Nigeria’s central bank plans to sell shorter-dated dollar forwards to inject liquidity into the official market and try to support the naira, traders said on Monday.

The local currency has weakened on both the official and black markets. The naira fell to 328.50 on the official market on Monday but later gained some ground to close at 306.15 after the central bank intervened. However, it slid past 400 naira on the black market.

“In the weeks ahead the (central bank) will sustain its intervention,” spokesman Isaac Okorafor said in a statement.

“The bank will sell short tenured forwards … to meet demand of manufacturers and all other foreign exchange users,” he said, adding the bank was striving to achieve exchange rate stability.

On Monday, traders said the bank will auction $100 million to be settled between one week and 30 days, as against sixty-day contracts it had written previously.

The bank auctioned $418 million at 310 naira on Friday to airlines, agricultural firms, petroleum and raw material importers in addition to $350 million it sold last week to individuals with certain foreign expenses, it said.

Nigeria is battling a currency crisis brought on by low oil prices, which has tipped its economy into recession, hammered its dollar reserves and created chronic dollar shortages, frustrating businesses and individuals.