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UPDATE 1-Nigeria naira firms 9.7% on black market on plans to sell FX to currency operators

Published 01/09/2020, 14:49
Updated 01/09/2020, 14:54
© Reuters.

(Adds official naira rate, background)
By Chijioke Ohuocha
ABUJA, Sept 1 (Reuters) - The Nigerian currency firmed
sharply on the black market on Tuesday, gaining 9.65% to 435
naira against the U.S. dollar, traders said, citing the central
bank's plan to restart forex sales to bureaux de change.
The central bank said in a circular on Thursday that it
would commence forex sales to retail currency operators from
Aug. 31 and would sell $10,000 twice weekly to each of the 2,991
operators. The currency, which had weakened to a low of 480 naira on
the black market in recent months, firmed from its previous
trade of 477 naira on Friday. On Monday, black market traders
had refused to show quotes as panic set in following the central
bank's announcement about retail currency operators on Thursday.
On the official market, supported by the central bank, the
naira was quoted at 381, where it has been stuck since July. It
traded at 386.03 naira against the dollar on the
over-the-counter spot market.
Dollar shortages have plagued Nigerian currency markets
after the coronavirus pandemic triggered an oil price crash,
slashing government revenues, weakening the naira and widening
the country's funding need.
The naira had been hitting new lows on the black market
since a 15% devaluation in March, which coincided at a time when
the central bank suspended dollar sales to the market due to
lockdown to slow the spread of the coronavirus.
With the sharp rise on Tuesday, traders doubt whether the
central bank will be able to meet pent up demand on the currency
built after it suspended forex sale. Reserves are dwindling and
sales to foreign investors are yet to resume.

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