CBN Sells $660million Forwards to Meet Soaring Dollar Demand

The Central Bank of Nigeria, CBN, has sold $660 million in three- and five- month currency forwards at an auction in order to clear a backlog of dollar demand.

The apex bank, last week, asked commercial lenders to bid in a special currency auction targeted at clearing backlog of dollar obligations of manufacturing, airlines, agriculture and petroleum sector. According to traders at the market, the results of the auction was announced late Tuesday while payment for the dollar sales is due on Wednesday.

This is the first major dollar sales to the key sector by the central bank in 2017 in a bid to spur growth and revive the nation’s economy which slipped into recession last year due to currency crisis. The dollar shortage in the OPEC member, whose crude sales make up two thirds of government revenue, has caused many companies to halt operations and lay off workers, compounding the economic crisis.

The local currency is quoted at 498 to the dollar on the black market, same level since last week, while commercial lenders are quoting 314 to the dollar at the interbank market on Wednesday, Reuters reports.