Nigeria central bank sold dollars on forward market above 400 naira

ABUJA: Nigeria's central bank sold dollars on the forward market above 400 naira to foreign investors for 150-day settlement with the spot market closing on bid throughout the week despite interventions, traders said.

The bank sold around $400 million to foreign investors and local companies on the forward and spot markets, traders said, selling $150 million at 407.18 naira on the forward market and $250 million at 395 naira on the spot market.

Dollar demand has been swelling and piling pressure on the naira. Importers with past due obligations have scrambled for hard currency while providers of foreign exchange, such as offshore investors, have exited.

The naira on Friday hit a low of 408.19 on the over-the-counter spot market, quoted by investors and importers, in thin trade, market exchange data showed.

Last month, the central bank weakened the naira to a record low of 600 to the dollar on the futures market for five-year settlement, highlighting the severity of dollar scarcity on the spot market.

Nigeria has been badly hit by the coronavirus pandemic and an oil price crash that have hammered an economy that relies on crude sales for government revenues, triggering an historic decline in growth and large financing needs as well as weakening the naira.

Foreign investors have sold Nigerian assets since February due to the pandemic-induced crash in the price of oil, Nigeria's main export.

It adjusted the spot market exchange rate in November after the naira fell sharply on the black market, widening the gap with the official rate of 381 set in July, prompting the central bank to ease rules on diaspora remittance

The World Bank said on Thursday that diaspora remittances this year were likely to fall to 2015 levels of $20.2 billion from $26.4 billion last year.