CBN to sell dollars in special auction to clear backlogs

By The Citizen

The Central Bank of Nigeria (CBN) has asked banks to bid in a special currency auction to clear a backlog of dollar obligations that businesses owe, traders said on Wednesday.

The central bank asked commercial lenders to submit backlog dollar demand from fuel importers, airlines, raw-materials producers, and makers of agricultural chemicals and machinery for manufacturers.

In a notice to commercial lenders, the central bank said it would hold a retail foreign exchange auction on Wednesday to sell two- to five-month dollar forwards. The amount of dollars to be sold was unspecified, Reuters said.

Last December, the central bank sold around $1 billion on the forward market to clear a similar backlog of dollar obligations, in an effort to support production in Africa's biggest economy

Meanwhile, investors are lining up to buy dollar bonds Nigeria is expected to issue soon despite the country's first recession in a quarter of a century, a currency crisis and budget shortfalls driven by low oil prices.

On the face of it, the $1 billion of bonds Nigeria hopes to sell by the end of March might seem unattractive, especially at a time sentiment towards African debt has soured after Mozambique missed a coupon payment. - Thisday.