30 May 2009

Nigeria: Naira Rises Against Dollar in Black Market

Lagos — Following the Central Bank of Nigeria's decision to lift restrictions on the inter-bank foreign exchange market three months from now and increase weekly forex sales to bureau de change operators, the naira has appreciated as much as 12 percent against the US dollar in the parallel market.

The naira, according to agency reports, traded at N160 to the dollar yesterday, compared with about N182 on May 22, when the CBN ban was lifted.

A foreign currency dealer who trades in Surulere, Lagos, said yesterday he bought the dollar at 161 naira today (yesterday).

The black-market rate's appreciation brings it closer into line with the official market, where the naira is trading at N148 per dollar.

The lifting of the forex controls imposed by the CBN last February indicate that the government's earnings are on the rise as oil prices increase, said Lucky Adaghe, head of global custody services at First Bank of Nigeria Plc.

"With the rise in the price of oil, the government believes it can sell more dollars now without depleting the country's foreign reserves," Adaghe said.

Oil futures in New York have gained 47 percent this year on speculation that demand will revive as the global economy starts to recover.

Crude oil for July delivery rose as much as 62 cents, or 1 percent, to $65.70 a barrel on the New York Mercantile Exchange yesterday.

The CBN banned currency trading between commercial lenders and restricted the supply of foreign currency to banks in a bid to stabilise the naira.

The announcement followed a 20 percent decline in the naira's value against the dollar after the central bank in November decided to let the exchange rate depreciate to protect foreign reserves as oil revenue dropped.

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