Nigeria's central bank sold the dollar at a weaker rate on Wednesday, traders say, in an effort to boost liquidity on the official market and narrow the naira's spread at the black market.
The central bank has been intervening on the official market to try to narrow the currency spread with the black market rate, which was 520 to the dollar a month ago.
The bank sold $1.5 million on Wednesday at 307.75, weaker than the 307.50 it intervened previous session. It has weakened the currency by 0.6 percent in the past two weeks.
On the black market, the naira gained 4.9 percent to a seven-month high of 410 per dollar as individuals rush to sell the U.S. currency.
"The regular intervention by the central bank has increased liquidity in the official market. The new policy has also eliminated spurious demand for the dollar," Aminu Gwadabe, the head of Nigeria's exchange bureaus, told Reuters.
Speculators betting on a naira fall "are taking a risk and will lose," central bank Governor Godwin Emefiele said on Tuesday. He added that he expects the black market rates to narrow further.
On Wednesday, the cost of insuring Nigerian debt against default fell to its lowest since December 2016, with five-year credit default swaps dropping to 603 bps, down 9 bps from Tuesday's close, according to data from IHS Markit.
"We see the naira stabilising around 380-400 to the dollar, but the central bank must review the multiplicity of rates to restore confidence in the market," Gwadabe said.
In February the bank devalued the naira for private individuals, saying it will sell dollars to them at 375 per dollar, a 20 percent margin from the official rate and half the premium obtained at the black market.
The move has left the West African nation with at least five exchange rates - the official one, a rate for Muslim pilgrims going to Saudi Arabia, the one for school fees abroad and a retail rate set by licensed exchange bureaus at 399.
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