LAGOS: The Nigerian naira rose against the dollar in thin early trade to 181.42 but remained on course for a 13.8 percent fall on the year. The stock market was set to end the year down 17 percent.
The central bank devalued the naira at the end of November and this month tightened trading rules to try to curb speculation against the currency, slowing trading to a trickle. The naira had been hard hit by falling world oil prices.
The devaluation of its target band by 8 percent to 160-176 against the dollar was meant to halt the slide in foreign reserves, but the naira has traded well outside that band -- and reserves are still falling.
Foreign exchange reserves fell to $34.5 billion by Dec. 29, central bank data showed on Wednesday, down 20.8 percent on the year.
Nigeria's central bank decreed last month that banks are no longer allowed to hold their own funds in dollars and that all dollars bought from the interbank market can be held only for up to 48 hours, as it sought to get tough on speculators.
The result has been a sharp drop in any kind of currency trading.
"People are mostly just giving indicative quotes. A lot of people are looking for dollars but there's not much dollar liquidity. I haven't been able to do a trade at all," one dealer said.
Nigerian shares rose for a 13th consecutive day on Wednesday to 34,352 but were still on course to end the year down 17 percent from last December's close.
"Some of it is market correction because most of the prices now are good value. Stocks are cheaper and that is attracting people back to the market," said one dealer.
He added that several dealers thought there had been an overreaction to the fall in oil prices.
Oil revenues make up 95 percent of foreign exchange and about three quarters of government revenue, but only 15 percent of gross domestic product (GDP).
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