During summer vacation, people travel more and need foreign money. This makes Nigeria’s naira weaker. On Wednesday, one dollar cost N1,612.50 in the official market, which is a four-month low.
Interestingly, in the black market, the naira did a bit better. On Friday, in the official market, one dollar was N1,596.92.
The Central Bank of Nigeria (CBN) tried to help by selling more U.S. dollars to dealers at a cheaper rate. These dealers then sell the dollars to people to control high prices. The CBN sold $106.5 million over two days to make the naira stronger.
The CBN said on Friday that more people want foreign money because companies need it and it’s summer. This makes the foreign money market unstable.
The CBN also told dealers not to sell foreign money at more than 1.5% above the buying price. On Thursday, they sold $20,000 to each currency dealer at N1,450 per dollar.
These sales are meant to reduce high prices and keep the market stable. The CBN said, “high prices in the small market are affecting the big market, making the price gap bigger.”
The CBN will keep helping the official market by giving them more dollars in the next few weeks. On July 18 and 19, they sold $106.5 million to 29 banks with rates between N1,498 and N1,530 per dollar.
For many years, Nigeria has had a hard time getting enough foreign money. This made many investors leave. Last year, President Bola Tinubu allowed freer trading of naira to close the price gap and attract investors.
The CBN is working hard to keep the foreign money market stable even when more people want foreign money.
Strong Dollar Because of Cyber Problems
This week, the dollar did well even though cyber issues hit banks, airlines, and TV stations. This made the dollar index go up on Friday, ending its two-week decline.
A tech problem from cybersecurity firm CrowdStrike affected many areas. Businesses started working again after a few hours. This cyber issue, along with U.S. economic data, made the dollar stronger for two days in a row.
The euro dropped to $1.0878 after the European Central Bank didn’t change interest rates and gave no clues about future plans.
In the UK, retail sales went down more than expected in June because of bad weather. This made the pound weaker, falling to $1.2909. The pound is ending a three-week winning streak.
The Federal Reserve will meet in late July, with low chances of a rate cut. However, traders expect a 0.25% rate increase in September.
Mary Daly from the Federal Reserve said she wants more proof that inflation is going down to 2% before reducing rates.