The Central Bank of Nigeria (CBN) has announced the sale of $106.5 million as foreign exchange (FX) to 29 FX dealer banks.
In a statement signed by Dr Omolara Omotunde Duke, Director, Financial Markets Department, it was disclosed that on July 18 and 19, 2024, the CBN sold $106.5 million to 29 authorized dealer banks at exchange rates ranging from N1,498/$1 to N1,530.00/$1 and bought $9.5 million from four authorized dealer banks at rates between N1,510/$1 and N1,550/$1.
The statement read: “Over the next few weeks, the CBN will continue to support various segments of the official markets with liquidity.
“In line with the above, the CBN on Thursday, July 18 and Friday, July 19, 2024, sold a total sum of US$106,500,000.00 (One Hundred and Six Million and Five Hundred Thousand US Dollars Only) to 29 (Twenty-Nine) Authorized Dealer banks between an exchange rate range of N1,498.00/US$1 to N1,530.00/US$1. In addition, it bought US$9,500,000 (Nine Million and Five Hundred Thousand Dollars) from 4 (Four) Authorized Dealer banks at rates between N1,510.00/US$1 and N1,550.00/US$1. The value date for all the transactions is July 19, 2024.”
CBN blames demand pressure for naira fall
The exchange rate on the Nigerian Autonomous Foreign Exchange Market (NAFEM) window closed at N1,596.92/$1 on Friday, depreciating by 1.88%.
In the statement on Friday, the CBN attributed recent foreign exchange market movements to corporate demand pressure and the seasonal summer uptick.
The CBN also said it has initiated regular foreign exchange sales through Authorized Dealer Banks and licensed Bureaux De Change (BDCs) to stabilize the market and ensure liquidity.
The statement noted: “The Central Bank of Nigeria (CBN) wishes to inform the general public that recent movements in the foreign exchange market are driven largely by demand pressure from corporate entities and the expected seasonal uptick during the summer period.
“The CBN, therefore, wishes to assure the general public that it has commenced a regular sale of foreign exchange through Authorized Dealer Banks and licensed Bureaux De Change (BDCs) to improve supply in the foreign exchange market in line with its price stability mandate and its commitment to ensure a well-functioning and liquid market.”
The apex bank noted that it is closely monitoring compliance with trading rules and regulations to promote ethical conduct and achieve market stability. The public is advised to direct foreign exchange demands to their banks and BDC operators in accordance with market regulations.
What you should know
- This is the second time the CBN is making FX sales to authorized dealers this month as the naira struggles with demand pressure.
- In an attempt to stabilize the foreign exchange market, the apex bank sold $122.67 million to 46 authorized dealers about a week ago.
- The CBN has also announced the approval of the sales of FX to eligible BDCs to meet the demand for invisible transactions in a decisive step to strengthen the naira on Thursday, July 18, 2024. The bank announced that the sum of $20,000 is to be sold to each BDC at the rate of N1,450/$1. This rate represents the lower band of the trading rate at the NAFEM from the previous trading day.