The Central Bank of Nigeria (CBN) is expected to clear $1.8 billion forex demand backlog as it resumes dollar sales of $100 million per week.
The five-year naira futures slid past 550 to the dollar on Thursday after the CBN weakened the naira on the derivatives market, signaling more pain to come for the currency, traders said.
The bank softened the currency on average by N73 across tenors, traders said, with the one-year maturity revised by N27. The 5-year naira futures, introduced in February, weakened to N569 per dollar, traders said, from N413 naira in the previous session.
The naira has been hitting new lows on the black and over-the-counter spot markets since March after the central bank adjusted its official rate, implying a 15 per cent devaluation. An oil price crash last month, triggered by a coronavirus pandemic, also worsened dollar shortages.
Reuters report said dollar demand has been swelling and piling up pressure on the naira. Importers with past due obligations have been scrambling for hard currency while providers of foreign exchange such as offshore investors have exited.
The market differential between one-year naira futures and forwards narrowed to 104 naira on Thursday from 130 naira in March, showing that the bank is keen to close the currency gap after an oil price plunge put the naira under pressure.
The non-deliverable forwards (NDF) market traded in London, which gives an indication of where the currency could trade in a year’s time, quoted the naira at 525 to the U.S. dollar.
The central bank devalued the official currency rate two months ago in a move to converge a multiple exchange rates regime which it has used to manage pressure on the naira
But dollar shortages has caused the gap between the black market and official market to widen especially after the bank suspended dollar sales in the wake of a coronavirus lockdown.
