Nigeria’s central bank auctioned dollars at 162.50 naira at its official forex window, outside its preferred band of 150-160 and ahead of a key interest rate decision on Tuesday, Reuters reports.
It the second time in a row it has auctioned the currency outside a band it burst out of in May, which is an indication of an official devaluation of the currency.
It auctioned the greenback at 158.41 to the dollar at its previous session.
The currency has been under pressure since the recent turn of global oil prices, which signifies dwindling receipt of foreign exchange by the Nigerian economy.
According to Reuters, the naira, which is down nine percent this year, hit a record low at the interbank window on Monday on concerns that a slide in global oil prices could undermine the central bank’s efforts to keep defending the currency, dealers said.
For CBN to continue to defend the naira at its former band, it must be willing to deplete the foreign reserves, which in itself trggers another kind of panic.
