The Central Bank of Nigeria (CBN) has sold
about $1 billion on the forward market to clear a backlog of dollar obligations
in selected sectors. Outstanding dollar demand was about $4 billion before June
when the 16-month-old peg was removed and efforts to cut dollar demand have
been largely unsuccessful due to low oil prices resulting in crude sales
accounting for about 90 per cent of Nigeria’s foreign exchange earnings.
Traders, a few
days ago, revealed that the central bank told banks to prioritise airlines,
manufacturing firms, petroleum products importers and agriculture sectors, the
sectors worst hit by the dollar shortage, in the auction.
“The
central bank sold $1 billion at last week’s special forex auction and directed
banks to issue fresh letters of credit to reflect the amount sold in favour of
the affected sectors,” a senior currency
trader told a foreign news outlet. Traders also said the central bank sold
30-day and 60-day forwards at the auction.
On December 19, 2016,
the central bank instructed commercial lenders to submit their backlog of
dollar demand from fuel importers, airlines, raw materials and machinery for
manufacturing firms and agricultural chemicals for the special forex
intervention.
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 and even leading to some foreign airlines
closing shop or reducing their operations over the inability to repatriate the
proceeds of their earnings due to dollar shortage.
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