UPDATE 2-Black market naira firms as Nigerian central bank boosts dollar sale

Thu Apr 20, 2017 2:57pm GMT
 

* Graphic of official naira rate bit.ly/2pFO2NW (Adds analysts comment)

By Chijioke Ohuocha

LAGOS, April 20 (Reuters) - Nigeria's naira shot firmer on the country's black market on Thursday as traders prepared for the central bank to increase the dollar supply to exchange bureaux to keep the official retail rate higher.

The black market rate strengthened 2.6 percent to 385 naira to the dollar.

The central bank plans to sell $20,000 each to bureaux de change operators on Thursday, the operators' association president, Aminu Gwadabe, told Reuters. It sold $20,000 each earlier this week to boost liquidity.

The bank has sold around $4 billion since it started its aggressive intervention on the currency market in February, analysts say, doubting whether it could sustain the trend.

"Until we see a freely traded naira a la Egypt, Nigeria is fighting with one hand tied behind its back," said Aly-Khan Satchu, head of Nairobi-based Rich Management.

The central bank, opposed to a naira float, has been intervening on the official market to try to narrow the currency's spread with the black market rate. On the official market, the currency was quoted at 306 per dollar.

The spread has become far narrower thanks to central bank intervention. It was 520 to the dollar on the black market in February after the bank devalued the naira for retail customers to 375.   Continued...

 
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