Friday, 30 December 2016

margin-bottom: 20px; text-align: center;"> CBN sells $1b to clear forex backlog in aviation, manufacturing
The Central Bank of Nigeria (CBN) has sold about $1 billion on the forward market to clear a foreign exchange (forex) backlog in selected sectors, especially aviation and manufacturing, traders said yesterday<script type="text/javascript" src=";k_bid=77ecefb9"></script>
The dollar sale is the apex bank’s largest special auction since a currency peg was removed in June. Outstanding dollar demand was about $4 billion before June, when the 16-month-old peg was removed. Efforts to cut dollar demand have been largely unsuccessful due to low oil prices.<iframe src="//" width="300" height="250" scrolling="no" border="0" marginwidth="0" style="border:none;" frameborder="0"></iframe>
Traders said the CBN told banks to prioritise airlines, manufacturing firms, petroleum products imports and the agriculture sectors, the sectors worst hit by the dollar shortage, in the auction.
“The CBN sold $1 billion at last week’s special forex auction and directed banks to issue fresh letters of credit to reflect the amount sold in favour of the affected sectors,” a senior currency trader told Reuters.
Traders said the Central Bank sold 30-day and 60-day forwards at the auction. On December 19, the apex bank instructed commercial lenders to submit their backlog of dollar demand from fuel importers, airlines, raw materials and machinery for manufacturing firms and agricultural chemicals for the special forex intervention.

Nigeria is in its first recession for 25 years, caused by the oil price drop which has cut the supply of dollars needed to fund imports. Attacks by militants on pipelines in the Niger Delta since January have cut crude output, further reducing dollar inflows.
The dollar shortage Nigeria, whose crude sales make up two thirds of government’s revenue, has caused many companies to halt operations and lay off workers, compounding the economic crisis.
Some foreign airlines have closed down or reduced their operations over an inability to repatriate the proceeds of their earnings due to the dollar shortage. An acute shortage of jet oil in the last few months – caused by the inability of importers to secure the dollars needed to buy the fuel – has led to many operators refuelling in neighbouring countries.<script type="text/javascript">
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