The Central Bank of Nigeria (CBN), in its quest to stabilize Naira injected funds to the currency market yesterday through the Wholesale Secondary Market Interventions.
The auction was earlier put on hold by the CBN due to the COVID-19 pandemic and dwindling foreign exchange reserves standing at less than $34 billion.
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However, the Central Bank of Nigeria surprised the market by injecting estimated $90-$100million to the system.
In contrast to the usual monthly Auction that the apex bank sells spot and short-tenured forward, the allocation to all banks was Spot at USD/NGN386 with the sizable Shareholders’ funds unimpaired by losses getting the largest allocation.
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What it means: This is expected to strengthen the Naira in the short run.
In addition, Nigeria’s Central Bank has lately affirmed its commitment to continue to boost the interbank foreign exchange market to ensure stability and availability to meet customers’ demand.
Since the start of Investors and Exporter window, the apex bank has increasingly intervened in the forex market as an active buyer and seller in making the currency spot market liquid and efficient.
READ MORE: Naira to depreciate slightly over $1.52 billion forward contracts
In making forex payment obligations easy for individuals, the CBN sold forex from its Forex reserves to stabilize the currency exchange rate despite poor earnings in foreign exchange due to low crude oil prices.