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The naira reached a six-month high on Wednesday of 400 per dollar on the black market, narrowing the gap between the exchange rates there and in the official market.

The Central Bank of Nigeria said last June it would allow the currency to float freely. Despite the policy change, the central bank has for months continued to manage the official rate, keeping the naira at just over 300 to the dollar on the interbank market since July.

The naira has been steadily strengthening over the past few days after hitting 520 per dollar on the black market a month ago. On Friday, it stood at 445, and yesterday it reached 420 to the dollar.

Godwin Emefiele, the governor, said then the central bank would intervene periodically to buy or sell. But as the naira slipped in the month after the pledged removal of the currency peg, analysts and economists said the central bank more tightly restricted dollar access in the official market to prevent the currency from weakening further. That drove demand for dollars into the parallel market, widening the gap between the official and black market rates.

Though the official rate was still at 307.50 to the dollar on Wednesday, the strengthening of the currency in the black market reflects the impacts of new steps by the central bank. For the past two weeks, the central bank has been intervening in the official market to narrow the currency spread. Traders say this has increased liquidity in the official market.

A broader question, however, is whether the increased foreign exchange sales by the central bank are sustainable—and whether they will be accompanied by the “currency flexibility” the government promised when it announced its economic recovery plan earlier this month. The West African country is in its worst economic crisis in decades, and its ability to secure loans from the World Bank and other international lenders this year to plug its budget deficit may hinge on further currency reforms.

Analysts and investors say the central bank needs to restore market confidence by implementing the policy they pledged last year: a single foreign-exchange structure. Putting aside the black market issue, the central bank is officially selling dollars at several different rates.

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