The Central Bank of Nigeria (CBN) has made a big move to help the country’s money market by selling $122.67 million to 46 authorized dealers.
This action is to make the market stable and stop sudden changes. The exchange rate closed at N1,554.65 for $1 on Thursday, which is the lowest since March 2024.
This information was given by Dr. Omolara Duke, the CBN’s boss for Financial Markets.
The statement said:
“The Central Bank of Nigeria (CBN) has sold the sum of US$122,671,000.00 (One Hundred and Twenty-Two Million, Six Hundred and Seventy-One Thousand United States Dollars) to 46 authorized dealers to keep the market steady and reduce sudden changes.”
Breakdown of Sales
According to the statement, the sales happened on Wednesday and Thursday of this week.
- On Wednesday, CBN sold $67.5 million to 27 dealers and bought $2.5 million from one dealer. The rate for these deals ranged between N1,480/$1 and N1,500/$1. Payments for these deals will be made on July 12, 2024, after a two-day waiting period.
- On Thursday, CBN sold $55.17 million to 19 authorized dealers at a rate of N1,540/$1. They did not buy any foreign exchange on this day. Payments for these sales are due on July 15, 2024.
CBN Instructs Dealers
The CBN has instructed dealers to make sure they use the foreign exchange bought from the bank for business purposes only, and they need to report these transactions within 72 hours.
The statement added that the CBN supplies foreign exchange to the market to improve liquidity using FX spot sales to authorized dealers.
Newslodge noticed that the amount of foreign exchange in the official market increased on Wednesday and Thursday.
On Wednesday, FX turnover in the official market shot up by 25.78% to $236.7 million, from $188.19 million the day before.
On Thursday, it rose even more, by 47.37%, reaching $348.82 million.
What You Should Know
These actions by CBN are happening as the exchange rate is moving towards N1,600 for $1.
In May, the naira value went up a lot in the official market. People said this was because the CBN sold more dollars in the official market before a $1.3 billion deal matured on May 29, 2024. Sources said that the CBN was trying to lower the exchange rate by selling foreign currency below market rate.
After these latest sales by the CBN, the naira stopped decreasing for three days and closed at N1,554.65 for $1 on Thursday.
The naira is expected to increase in value today, Friday, in the official market because of the CBN’s sales.