In July 2024, Nigeria’s exchange rate dropped to N1608.73 per $1. This means the naira lost 6.43% of its value in the official market.
According to FMDQ data, the naira was at its lowest in four months in July. It ranged between N1500.32 to N1621.12, breaking the N1600 mark.
The Central Bank of Nigeria (CBN) tried to stabilize the naira by selling dollars, but the naira still fell.
CBN Helps With More Dollars
In July, the CBN made at least three sales of foreign exchange (FX) to dealers and one to Bureau de Change (BDC) operators to ease the naira’s problems.
These actions from CBN increased the FX turnover in the Nigerian Autonomous Foreign Exchange Market (NAFEM) last month.
Nairalytics data shows that FX turnover in the official market went up by 30%. It rose to $4.34 billion from $3.33 billion the previous month.
CBN Sold $377.17 Million to Dealers
In July, the CBN sold at least $377.17 million to authorized FX dealers.
One sale happened in the first week of July. CBN sold $122.67 million to 46 dealers. They did two-day sales: $67.5 million on the first day and $55.17 million on the second day. The payments were due on July 12 and July 15, 2024.
The CBN asked that FX bought must be used for trade-backed transactions and reported within 72 hours.
The next week, CBN sold $106.5 million to 29 FX dealer banks. They sold it at rates between N1498/$1 to N1530/$1. They also bought $9.5 million from four banks.
The CBN said the market changes were due to demand pressure and summer season.
To stabilize the market, the CBN regularly sells FX to Dealer Banks and licensed BDCs.
The third sale was $148 million to dealers at rates between N1470/$1 and N1510/$1.
On July 18, 2024, CBN also approved sales of FX to eligible BDCs for $20,000 each at N1450/$1.
Important Points
The CBN said they will keep working to ensure enough dollars in the market for stability.
Recently, CBN told dealer banks to list all outstanding FX demands. This will help reduce pressure on the naira.
On August 7, 2024, CBN will do a Retail Dutch Auction System (rDAS) to provide FX for eligible transactions and ease demand pressure.