The Central Bank of Nigeria (CBN) has made what it describes as a special intervention to ensure that foreign exchange is available for oil importers' letters of credit (L/Cs) reaching maturity.

Nigeria is suffering a severe US dollar shortage and wants to avoid the economic problems caused by a lack of fuel.

Currency auction

The CBN sent traders an invitation on 5 December 2016 to submit bids for what it described as a special currency auction.

The auction specifically targeted fuel traders so that they would be able to meet payment obligations as their L/Cs for imported fuel mature.

Shortages

The CBN wants to ensure that fuel retailers have enough products and avoid fuel shortages.

Previous shortages in May severely disrupted banking, airline and telecommunications services.

Exchange rates

The central bank did not make clear at what rate it would sell US dollars in its special intervention.

The naira has typically been trading at around 305 per US dollar on the official market since the CBN in June abandoned its dollar peg of 197 against the US dollar.

The black market rate for the naira is around 484 to the US dollar.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.