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UPDATE 1-Nigeria central bank intervening to prop up naira, trader says

Published 01/08/2019, 13:19
Updated 01/08/2019, 13:20
UPDATE 1-Nigeria central bank intervening to prop up naira, trader says

(Adds quotes, details)
By Chijioke Ohuocha
LAGOS, Aug 1 (Reuters) - The Nigerian central bank has been
intervening in the currency market over the past two weeks to
keep the naira stable as foreign investors took profits after
yields fell on the local debt market, a trader told Reuters.
The naira was quoted at 362.80 to the dollar on the currency
market for investors, weaker than the level around 361 level
where it has traded for much of this year, said the dealer, who
trades currency for the local unit of an international bank.
Pressure has been building on the currency amid a dwindling
supply of dollars. It now takes more than a week to fill
customer orders.
Nigeria operates a multiple exchange rate regime. It
maintains an official exchange rate of 306 naira to the dollar,
supported by central bank. The traded rate of 362.80 is the one
widely quoted by foreign investors and exporters.
The central bank does not disclose how many dollars it
injects into the currency market.
"We are currently seeing more outflow than inflow ... but
the central bank has been intervening," the trader said. "The
moment the central bank doesn't provide support, people may
start to panic."
Nigeria's central bank has cut back on open market auctions
to attract foreign investors in its bonds, a policy shift aimed
at stimulating lending to boost an economy stuck with low growth
after a recent recession.
The bank auctioned a one-year open-market bill last month at
around 12%, down from as high as 18% a year ago.
The trader said some offshore clients were taking profits
and that summer holidays in Europe could also account for the
low volumes.
"If local rates were much higher, I don't think we would
have seen much outflows."

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