Nigeria central bank floats embattled naira currency

He said this will kick off the era of automatic adjustment mechanism of the Naira-dollar rate with the operation of a flexible interbank market which shall also have primary dealers.

LAGOS, June 15 Nigerian non-deliverable forwards fell across the curve on Wednesday after the central bank launched a new interbank foreign exchange trading window to boost the supply of hard currency in Africa’s biggest economy, its governor said. Nigeria’s central bank has no target for the naira, he said.

One-month dollar-naira NDFs fell by 3.55 percent to 300 to the dollar.

The central bank will still be able to inject dollars into the market, giving it some control over the exchange rate within the limit of severely depleted foreign reserves.

Nigeria has pegged the naira to the dollar at 197-199 since March 2015, even as other oil exporters have let their currencies devalue in the wake of plunging global crude prices.

Emefiele hopes opening up trading will ease severe USA dollar shortages caused by a slump in oil revenue. “The takeaway is that the central bank has not committed to any exchange rate”. In September 2015, Nigeria was removed from J.P. Morgan’s emerging- market bond index, triggering billions in redemptions from bondholders. Sales must be backed by a specific customer order to avoid currency speculation, the central bank said.

Full details of the new foreign exchange policy will be released later on Wednesday and introduced from next Monday, he said.

The Nigerian economy experienced a contraction of 0.4 per cent for Q1, the first drop that the country has experienced since the 1990s. Higher import prices will add to inflation…