The Central Bank of Nigeria (CBN) has been intervening in the currency market over the past two weeks to keep the naira stable as foreign investors took profits after yields fell on the local debt market, a trader told Reuters.
Analysts also pointed out that, Nigerians traveling to Europe for summer vacation are putting pressure on the naira as well.
The naira was quoted at N362.80 to the dollar on the currency market for investors, weaker than the level around N361 level where it has traded for much of this year, said the dealer, who trades currency for the local unit of an international bank.
Pressure has been building on the currency amid a dwindling supply of dollars. It now takes more than a week to fill customer orders.
“The apex bank operates a multiple exchange rate regime. It maintains an official exchange rate of N306 to the dollar, supported by central bank. The traded rate of 362.80 is the one widely quoted by foreign investors and exporters,” said Reuters.
The central bank does not disclose how many dollars it injects into the currency market.
“We are currently seeing more outflow than inflow … but the central bank has been intervening,” the trader said. “The moment the central bank doesn’t provide support, people may start to panic.”