The Central Bank of Nigeria said it plans to sell an undisclosed amount of dollars on Tuesday to settle a backlog of foreign exchange demand for airlines, fuel and raw material imports.
According to some of the traders, the CBN had asked commercial lenders to submit bids for dollars to cover the previously unmet demand for hard currency for specific sectors as it tries to improve dollar liquidity and ease pressure on the naira.
“Banks shall not allocate funds for customers LCs (letters of credit) – that have already benefited from past special market intervention sales (SMIS) that are yet to mature,” the central bank said in circular.
Africa’s largest economy was grappling with a currency crisis brought on by low oil prices which have hammered its foreign reserves and created chronic dollar shortages, has resorted to regular injections of dollars by the central bank to narrow the spread between the official and black market rates.
It has sold more than $4 billion to various sectors of the economy since the central bank started intervening on the official market in February. Currency traders say this has increased liquidity and helped to ease pressure on the naira.
The naira was quoted at 381.31 per dollar at the investor window on Tuesday, according to the market regulator FMDQ OTC Securities Exchange.
Commercial lenders were yet to put up a quote on the official interbank market, but the naira closed at about 305.25 a dollar on Monday on the market, while it was quoted at 381 a dollar on the black market.
The naira has firmed on the black market from its record low of 520 to the dollar in February, before the central bank’s intervention in the foreign exchange market.
However, a former Deputy Governor of the Central Bank of Nigeria, CBN, Dr Obadiah Mailafia, has lamented that the naira could no longer be used outside the country as before.
Mailafia recalled that during the 70s, the currency was acceptable in London, Mecca and Medina.
He called on the Federal Government to take measures that will make the Naira become useful internationally.
“In fact, our Muslim brothers used to go to Mecca and Medina that time and they could spend and buy goods with Naira. We need to restore the purchasing power, the honour and dignity of the Naira as our proud currency and the symbol of National honour” he said.
