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CBN Sells $1b Forex to Clear Demand Backlog

By Modupe Gbadeyanka

Foreign exchange worth N1 billion has been sold by Central Bank of Nigeria (CBN) on the forward market to clear a backlog of dollar obligations in selected sectors.

The transaction, according to traders, was the largest special auction since the peg on the naira was removed in June.

Reuters reports that the CBN had told banks to prioritize airlines, manufacturing firms, petroleum products importers and 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,” Reuters quoted a senior currency trader as saying.

Traders said the central bank sold 30-day and 60-day forwards at the auction.

The CBN had, December 19, instructed banks 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.

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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