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Last Updated: Tuesday, 14 August 2007, 16:57 GMT 17:57 UK
Nigeria set to free its currency
Lagos, Nigeria
Analysts think the move will help strengthen Nigeria's currency
Nigeria's central bank has said it will make the country's currency, the naira, convertible by 2009.

Until now, the central bank has limited how much foreign currency can circulate by selling it through auctions. It has also set the exchange rate.

The change should help increase flows of money into the banking system and encourage investment into Nigeria.

The government will also redenominate its currency from August 2008, so that 100 old naira will become 1 naira.

This should help make the pricing of goods easier, as well as conversion into other currencies.

Gradual withdrawal

The naira has been appreciating against the dollar this year, thanks to Nigeria's high oil revenues.

Analysts think the naira will be further strengthened following the latest currency changes.

"This is very positive. I agree fully with all the initiatives," said Tony Elumelu of Nigerian bank UBA.

The central bank's governor Chukwuma Soludo said the bank would "gradually withdraw from the weekly auction system [of foreign currency] and only intervene in the market as may be required to achieve defined policy objectives."

The currency changes apply to commitments Nigeria has made under International Monetary Fund (IMF) rules regarding currency transfers.

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