Nigeria's central bank to act to stabilise naira

Nigeria’s central bank will intervene in the foreign-exchange market from Thursday to ensure the naira’s stability after the local currency fell sharply against the dollar, Governor Chukwuma Soludo said.

“We are ready to intervene in the market, beginning from tomorrow [Thursday]. The central bank will meet all demand at the forex market at the market-determined exchange rate,” Soludo told Reuters by telephone.

He said the central bank was ready to buy and sell as necessary.

The naira weakened close to 8% to almost 130 to the dollar on Tuesday as dealers digested the impact of a budget announcement by the president and reacted to what appeared to be a managed depreciation of the local currency.

Banks said no spreads were being quoted on Wednesday on the interbank market as dealers waited for clarity on the central bank’s policy and as dollar supply all but dried up.

The central bank allowed the naira, broadly stable against the dollar for months, to depreciate further at its biweekly auction on Wednesday, selling at between 127 to 129 compared with about 118 on Monday and 116 a week ago.

It sold only $180-million on Wednesday and $100-million on Monday despite demand of about $2-billion, leaving banks scrambling for dollars from other sources.

Soludo blamed the naira’s depreciation on speculators.

“Those who have been speculating in the market will be made to pay a heavy price for their actions,” he said.—Reuters

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