LAGOS Oct 31 (Reuters) – Nigeria’s central bank will sell $500 million of two- and three-month currency forwards at auction on Monday to clear a demand backlog from manufacturers, traders said, as it seeks ways to resolve a chronic dollar shortage.
A lack of dollars has caused many firms to halt operations and lay off workers, compounding an economic crisis rooted in falls in the price of oil, which accounts for 70 percent of Nigeria’s budget revenues.
Africa’s biggest economy is facing its first recession in 25 years.
The central bank asked lenders to submit bids for the forwards before 1300 GMT, traders said.
The bank held a two-month dollar forward auction two weeks ago in which it sold less than expected, traders said.
The economic crisis has kept the naira under pressure against the dollar, and the central bank has struggled to support the local currency with diminishing foreign exchange reserves.
It said on Monday its dollar reserves dipped to $23.95 billion as of Oct 27, down 2.7 percent from Sept 27 and 20.5 percent lower than a year ago.
Traders said there had been no activity on the interbank market, where the naira is quoted at 305 per dollar, two hours after it opened on Monday.
On the black market, the naira was quoted at 470. (Reporting by Chijioke Ohuocha and Oludare Mayowa; editing by John Stonestreet)
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