	nigeria changes auction rules to defend the naira nigeria s central bank has changed the rules governing its foreign exchange auctions in what analysts see as a means of defending the naira currency which has depreciated steadily the bank said in a statement that from april banks bidding for foreign exchange would have to pay at the rate they offered and not as presently at the rate of the lowest successful bid made at the auction this should discourage banks from bidding high to ensure that they were successful while paying the lower marginal rate analysts said it should act as a brake because banks will know that if they bid high they will have to pay what they offered a western diplomat commented the naira has depreciated against the dollar by pct since the auctions known as the second tier foreign exchange market sfem began last september at last week s session the nigerian currency was fixed at to the dollar the third fall in a row they were clearly worried and this is the logical way of trying to stop the trend the diplomat said the central bank also announced the auctions would be fortnightly not weekly beginning on april it was not immediately clear whether next thursday s scheduled session would still take place nor if the bank was planning to double the mln dlrs which are normally on offer at each auction demand for foreign exchange has consistently outstripped supply encouraging banks to bid high and thus further weakening the naira if the normal weekly allocation is not doubled at the fortnightly session high demand could undermine the objective of the new system analysts said although bidding banks will now pay what they offered the official exchange rate for the naira applying to business transactions will continue to be the marginal rate the lowest successful bid sfem is a central part of nigeria s structural adjustment program which is considered to be the most ambitious economic recovery plan in black africa the program involves setting a realistic exchange rate for the naira which was over valued for many years liberalising imports boosting agriculture removing subsidies and reducing inefficient government participation in the economy the world bank has played a prominent part in designing this dramatic blue print and in selling it to an often sceptical public which fears inflation and lower living standards ishrat husain the world bank s representative in nigeria said yesterday he was satisfied both with the adjustment program as a whole and the foreign exchange auctions so far so good he told a meeting of bankers in lagos adding that only members of nigeria s import dependent elite would suffer hardship while the common man would benefit fears that the program would encourage inflation were incorrect he said bumper harvests had reduced rural inflation and urban prices had already reflected the naira s black market value before the currency was allowed to find its true level last september reuter 
