Nigeria shortens FX settlement period as naira weakens

 Nigeria's central bank plans to sell shorter-dated dollar forwards to inject liquidity into the official market and try to support the naira, traders said on Monday.
The local currency has weakened on both the official and black markets despite a series of interventions. The naira fell to 328.50 on the official market on Monday with only $80,000 traded. It slid past 400 naira on the black market. 
"In the weeks ahead the (central bank) will sustain its intervention," spokesman Isaac Okorafor said in a statement.
"The bank will sell short-tenured forwards ... to meet the demand of manufacturers and all other foreign exchange users," he said, adding that the bank was striving to achieve exchange rate stability.
On Monday, traders said the bank will auction $100 million to be settled between one week and 30 days, as against sixty-day contracts it had written previously.
The bank auctioned $418 million at 310 naira on Friday to airlines, agricultural firms, petroleum and raw material importers in addition to $350 million it sold last week to individuals with certain foreign expenses, it said.
Nigeria is battling a currency crisis brought on by low oil prices, which has tipped its economy into a recession, hammered its dollar reserves and created chronic dollar shortages, frustrating businesses, and individuals.
It now has at least five exchange rates -- the official one, the black market, a rate for Muslim pilgrims going to Saudi Arabia, a retail rate set by licensed exchange bureaux and a rate for foreign travel, school, and medical fees.
The multiple exchange policy has masked the pressure the currency is under and made it difficult to attract inflows as investors struggle to price naira assets, analysts say.
The central bank, opposed to a free naira float, has been selling the U.S. currency on the official currency market to try to narrow the spread between the black market rate after the black market rate hit a record high of 520 in February.
It has since devalued the naira for consumers to 375 and has been intervening selling more than $1 billion in forward currency sales since February.
Last week the International Monetary Fund (IMF) said the naira was overvalued by around 10 to 20 percent and called for changes to Nigeria's exchange rate policy.

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