Nigeria's central bank said today it would return to a fully liberalised foreign exchange market over the next three months, allowing banks to freely trade among themselves after months of restrictions, Reuters reported. The regulator said it was increasing the net foreign exchange open position for banks to 2.5 percent from 1 with immediate effect, a first step toward lifting measures brought in in January to stem the naira currency's sharp decline. "Banks are no longer mandatorily required to sell to the central bank after five daysfunds sourced from non-RDAS and non-oil export proceeds and may use such funds for interbank transactions," it said in a statement. Nigeria introduced the Retail Dutch Auction System (RDAS) on Jan. 19, meaning bids for the purchase of foreign exchange must be cash-backed and funds purchased could only be used for eligible transactions. The measures came after the naira fell more than 20 percent against the dollar in two months as the world's eighth biggest oil exporter battled with lower foreign earnings caused by a weaker oil price and the global economic downturn.
