The naira firmed strongly on the black market on Thursday as traders prepared for the Central Bank of Nigeria (CBN) to increase the dollar supply for exchange bureaux to keep the official retail rate higher.
The black market rate strengthened 1.27 percent to 395 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 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 315 on Thursday.
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.
February’s move effectively created multiple exchange rate, including official, black market and one to pay for education.
On Tuesday, the bank cut the amount of paperwork small and medium-size businesses must provide to buy dollars, also among to improve liquidity and attract them away from the black market. It also said it will sell $20,000 per quarter per business.
Gwadabe said the increase in currency sales to exchange bureaux would help take out pressure from the black market, adding that some importers were no longer bringing forward dollar demand as liquidity continues to improve.