Nigeria’s naira opened 6.2% lower against the U.S. dollar on the official market on Wednesday as traders quoted the currency close to the over-the-counter spot market rate on indications the government would move to conserve dwindling reserves.
In a finance ministry document seen by Reuters on Wednesday, the Minister of Finance Zainab Ahmed said the government would seek to unify the exchange rates to generate more naira from its foreign inflows and manage the rate in a sustainable manner.
It would also direct oil firms to sell dollars to the central bank as opposed to the state-owned petroleum corporation NNPC, Ahmed said, adding that the government would deregulate petroleum prices as part of measures to safeguard oil revenues.
The policies will be implemented over a 12 month period, the document said. The naira traded at 385 per dollar on the official market, supported by the central bank on Wednesday, before recovering to 361, where it closed on Tuesday, data from Refinitiv Eikon showed.
The central bank did not immediately respond to a request for comment.
Nigeria, Africa’s largest economy, has operated a multiple exchange rate regime used by the central bank to manage pressure on the naira. But dollar shortages have plagued the economy after the coronavirus-induced oil price crash slashed government revenues and weakened the local currency.
The currency 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% devaluation.
The naira was quoted at 452 on the black market on Wednesday, while the longest five-year currency futures contract quoted it at 578.69. Reuters
