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By Oludare Mayowa
LAGOS, June 15 Nigeria's central bank said on
Thursday its new currency window for investors had handled $2.2
billion of trade in six weeks, but it had accounted for almost
30 percent of that trade itself as it worked to keep the window
Nigeria is battling a currency crisis brought on by low oil
prices, which has tipped its economy into recession and created
chronic dollar shortages. Africa's biggest economy wants to
attract foreign investors and at same time maintain a strong
currency to ward off inflation.
Spokesman Isaac Okorafor said the central bank would ensure
it sustains intervention to support the naira and that the bank
was comfortable with its dollar reserve level of $30.3 billion.
Analysts estimate the bank has spent more than $5 billion
defending the naira this year.
"Average trading on investors' window is now $2.2 billion in
the first six weeks of its introduction with our participation
restricted to less than 30 percent," Okorafor told Reuters.
"This showed the level of confidence in the system."
Before the investors' window was introduced in April, the
central bank was the main supplier of hard currency on the
interbank forex market, after foreign investors fled naira
assets in the wake of an oil price slump in 2014.
The regulator has allowed investors to trade the naira at
rates set freely between buyers and sellers, hoping to increase
the amount of dollars available in Nigeria - but effectively
introducing yet another exchange rate to the five already in
Nigeria has an exchange rate for Muslim pilgrims going to
Saudi Arabia, a retail rate set by licensed exchange bureaus,
and a rate for foreign travel and school fees, in addition to
its official and black market rates.
The stock market has reacted positively to the introduction
of the investor window, rising 34 percent in six weeks with
volumes more than doubling. The rally also partly follows MSCI's
recent move to boost Nigeria's weighting on its frontier index,
"When we started intervening in the market, the question was
sustainability but we will ensure the process is sustained,"
Okorafor said in Lagos.
The central bank last year removed a temporary peg to float
the naira, but to protect its precariously low foreign reserves
it introduced the convoluted exchange rate system that sees
different buyers paying various rates for dollars.
It has said the move is needed to eliminate frivolous demand
for foreign currency.
The naira was quoted at 372.70 on the investors' window
on Thursday. It traded at 365 on the black market
and was stuck at around 305.25 to the dollar on the
"Today we are gradually achieving convergence between the
investor window and invisible window (FX rate for retail
users)," Okorafor said.
(Writing by Chijioke Ohuocha; editing by Jeremy Gaunt/Mark