Nigeria’s Central Bank Governor (CBN), Lamido Sanusi, said the CBN would immediately liberalize its foreign exchange (Forex) market, lifting restrictions imposed earlier this year. This relaxation of restrictions on foreign exchange trading comes after the recent stabilization of the local currency, the Nigerian naira, and recovery in oil prices, which have boosted Nigeria’s foreign currency reserves.
“All other restrictions imposed recently are removed,” Lamido Sanusi said today at a briefing in the capital, Abuja. The move frees the country’s banks to resume dealing in foreign currencies among themselves and on behalf of their customers, as was the practice before the restrictions were imposed.
Nigeria banned interbank foreign currency trading on February 9. The lenders were ordered to sell foreign currencies only to the CBN in a bid to stem the depreciation of the naira. The naira was not allowed to rise or fall by more than 3% against a target exchange rate.
The naira had fallen about 20% between November 26 and early February, as the government let it weaken rather than run down foreign reserves. Nigeria’s reserves stood at $43.2 billion on July 3, according to data on the CBN’s website, compared with about $62 billion in October last year.
Crude oil, which accounts for 90% of Nigeria’s export earnings, sold for $64.89 a barrel today, up from as low as $32.40 in December, boosting Nigeria’s ability to defend the naira.
One dollar sold for 153 naira today, according to Adamu Hadejia, a street currency trader in Abuja, versus the central bank rate of 146.70 naira per dollar, according to a recent Citibank note. One dollar was sold for as much as 185 naira in February.
