Nigeria’s Central Bank Helps Shore Up The Naira With $230M Derivatives

by Ike Obudulu Last updated on August 26th, 2017,

The Central Bank of Nigeria says it has sold $230 million  to 16 banks through the interbank foreign exchange market. Sixteen banks shared in the $230 million foreign exchange (forex) mart by the Central Bank of Nigeria through the forward contract agreement. This forms part of the fulfillment of the apex bank’s pledge to ensure liquidity in the interbank market under the latest policy announced last week.

Of the 16 financial institutions, 13 are commercial banks, one is a development financing establishment, while two are merchant banks. The apex bank said that the move was to enable the banks meet demand for basic transport allowance, school fees and medicals by customers and to ease the stress of genuine customers in obtaining foreign currencies.

Consequently, the parallel market strengthened to N460 per dollar, its highest level in more than three months, following the series of interventions by the apex bank. Last week, the regulator offered $500 million in 60-day forward contract, but ended up selling $370 million, as some banks could not back up their bids with naira equivalent or provisions.

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