The Central Bank of Nigeria has urged Biding Banks to bid for forex at an auction 5% above its official rate of 360, traders said, in a move to weaken the naira as the regulator seeks to unify its multiple exchange rates.
The central bank said last week it will work towards the gradual unification of exchange rates across all forex windows.
The Nigerian Central Bank has operated a multiple rate regime which it has used to mask pressure on the naira and to absorb the impact of lower oil prices.
But continuous dollar shortages have harmed the economy after a coronavirus-induced oil price crash slashed government revenues and weakened its naira currency, funnelling demand to the black market where the naira is trading much weaker at 450 per dollar.
According to a report by Reuters, the Nigerian Central Bank, the country’s main supplier of dollars, depreciated the forex rate for retail interventions to 380 to the dollar from a previous rate of 360, traders said, quoting a message from the regulator to lenders.
The CBN wants to unify rates to conserve its dwindling foreign exchange reserves which lost $8.5 billion to sit at about $36 billion in May due to an increase in imports from last year and demand from investors exiting Treasury bills.
With this measures, the CBN has moved its retail auction for importers and individuals closer to the over-the-counter spot market widely quoted by investors and where the naira was on Friday quoted at 387.50 to the dollar.