Nigeria naira recovers from record black market low against dollar
ABUJA, July 30 (Reuters) - Nigeria naira firmed 1.55% to 517 on the black market on Friday, recovering from a record low it hit after traders hoarded foreign currency following a surprise announcement by the central bank to ban dollar sales to exchange bureaux.
The currency fell to new lows on Wednesday and Thursday, reaching 525 naira to the dollar. It then firmed slightly as trades opened on Friday.
The central bank on Tuesday said it will halt dollar sales to exchange bureaux to curb speculation. This subsequently strengthened the naira on its futures market.
On the official spot market, the naira was quoted at 411.50 per dollar, a range of between 407 naira and 412 naira at which it has traded since last month.
Nigeria has several exchange rates operating in parallel, a system put in place during a 2016 oil price crash because the government was seeking to avoid a large official devaluation of the naira as a matter of national pride.
"We fear the latest directive represents yet another formal avenue aimed at throttling FX supplies and strengthening the central bank´s grip on the market," said economist Irmgard Erasmus at NKC African Economics in a note.
"The absence of a market-clearance model at competitive prices has left informal traders of consumer staples, including food, with little recourse.
"We would prefer the central bank to utilise the price mechanism within an open economy model -- including a flexible FX regime -- to incentivise or discourage certain behaviour, rather than the hard-handed approach to capital and current account flows." (Reporting by Chijioke Ohuocha; Additional reporting by Karin Strohecker in London; Editing by Jon Boyle and Clelia Oziel)
