Nigeria’s central bank stepped up dollar sales this week after it auctioned the U.S. and Chinese currencies last week in a bid to alleviate shortages and ease pressure on the naira.
On Friday the bank said it sold a total of $543.22 million on the interbank market and another 63.21 million yuan ($9.20 million) to settle letters of credit denominated in the Chinese currency via spot and forward contracts, it said in a statement.
Last week the central bank asked lenders to submit bids for the Chinese yuan, its second auction of the currency after it agreed a swap with the People’s Bank of China in May to boost trade between the two countries and cut reliance on the dollar.
It sold $210 million on Thursday and $323.22 million on Friday after a dollar auction last week, the bank said.
Isaac Okorafor, central bank spokesperson said “the bank remained committed to maintaining the country’s external reserves to safeguard the international value of the naira.”
The central bank typically sells between $200 million and $300 million when it enters the interbank market, traders said.
However, dollar liquidity has been shrinking as a result of capital reversals after the U.S. central bank started to raise interest rates this year.
Trading was quiet this week as the little quantity of hard currency sold by local exporters was unable to meet demand, traders said, with importers bidding repeatedly to try to fill their request.
The naira has been quoted as weak as 364 per dollar for investors this week after trading within a range of 362 to 363. On the official market, supported by the central bank, it was quoted at 306.10.
The central bank said the naira was trading at 360 per dollar at exchange bureaus and the yuan sold for 53.17 naira.
It attributed the relative stable exchange rate to its interventions as well as higher global oil prices. Nigeria operates a multiple exchange rate regime which it has used to manage demand for hard currency. ($1 = 6.8740 Chinese yuan renminbi)