Nigerian naira currency gained about 1 percent on Friday against the US dollar as the foreign exchange market reacted to central bank measures to tackle money laundering.
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| Naira and Dollar in exchange |
Nigeria's central bank reintroduced the retail selling of dollars to banks' customers, in place of the previous wholesale system in operation since 2009.
Traders said the measure will ensure substantial reduction in dollar demand at the official window, and help the regulator to track flows of dollar in the Africa's second biggest economy.
"The reaction to the central bank circular on new foreign exchange transactions was enormous as many banks decided to be short on their dollar position, and this helped the naira to appreciate," one dealer said.
Dollar sales by three major energy companies -- Chevron $7.1 million, Eni $15 million and undisclosed amount of dollars by Royal Dutch Shell -- also boosted the local currency.
Dealers said the naira should strengthen further in the near term as the new central bank measure would curb speculative attack on the naira as banks trade cautiously in the market to avoid being sanction by the regulator.
The naira has been under pressure from strong demand from importers and offshore investors exiting the local bond market, but it recovered somewhat since last week when the U.S. Federal Reserve suggested it may wait before scaling back bond buying.
During a bi-monthly committee meeting on interest rates on Tuesday, Central bank Governor Lamido Sanusi pledged to use foreign exchange reserves to defend the naira, reiterating that there would be no devaluation of the local unit.
He also raised the alarm about a surge in dollar demand linked to political activities ahead of 2015 elections, which he suggested carry a high risk of money laundering.
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