CBN auctions $6000m in FX forwards this week
The Central Bank of Nigeria (CBN) auctions $230 million in forward contracts on the official market on Thursday after selling $370 million, to hit a total amount of $600million sold this week on the official interbank market, so as to boost dollar liquidity and help narrow the gap between the official and black market rates, traders said.
The apex bank, also sold $1.5 million on the spot market to help keep interbank rates at 305.50 per dollar. On the black market the naira firmed to 490 after opening at 505, traders said.
The CBN noted that it has decided to significantly reduce the tenor of its forward sales from the current maximum cycle of 180 days, to no more than 60 days from the date of transaction.
Explaining further, he disclosed that, “In order to further ease the burden of travellers and ensure that transactions are settled at much more competitive exchange rates, the CBN hereby directs all banks to open FX retail outlets at major airports as soon as logistics permit.”
He said CBN will continuously and vigorously pursue a transparent, liquid, and efficient foreign exchange Market.
“The Bank therefore encourages market participants to assist in ensuring that these new measures engender the preservation of our external reserves, stability of our financial system, and growth of our economy to the benefit of all Nigerians,” the statement by Okorafor added.
Meanwhile, the naira is expected to appreciate on the black market after the central bank said it will offer some customers dollars at a preferential rate.
Consequently, the local currency is expected to gain on the parallel market in the days ahead while it is likely to weaken on the official interbank market as the central bank starts selling dollars to some private individuals.
The central bank said on Monday it will offer dollars to individual buyers at 20 percent above the official rate in a move to ease pressure on the local currency, and close the gap between the official market and the black market.
