Naira quoted at 253/$ as interbank market opens in Nigeria

Nigeria’s naira was quoted at 253 against the dollar on Monday as a new interbank market opened as announced last week by the central bank. However, Reuters quoted dealers to have said no trades were agreed yet.

The central bank had said it would  launch a foreign exchange interbank trading window to boost the supply of foreign currency, spur economic growth and restore investor confidence after 16 months of using a fixed exchange system which saw the currency pegged at 197 to the dollar.

The central bank will select a group of around 10 primary dealers through which the naira will be traded. There will only be one official exchange rate and the bank will intervene in the market to buy or sell foreign exchange “as the need arises”.

Nigeria has suffered from foreign exchange shortages since global oil prices fell in 2014. Public finances have been affected, as have currency reserves. The country depends on oil for more than 70 percent of government revenues and more than 80 percent of foreign exchange.

The new regime is expected to  “release a pressure valve for the economy,” Johannesburg-based analyst Yvonne Mhango told Bloomberg. “We see the economy beginning to thaw and green shoots emerge possibly as soon as a year from now. Before then, we believe the macro picture will deteriorate.”

Figures from a foreign exchange website, which follows rates across board, show that the naira has strengthened against the dollar on the black market over the past few days.