CBN Intervenes in FX Market with $50m as Naira Faces Pressure
The Central Bank of Nigeria (CBN) was in the forex market to support the local currency, selling $50 million to authorised dealer banks to strengthen the supply side.
The naira started facing intense heat as FX inflows continued to reduce, while US dollar demand for foreign payment was on the rise. Since the naira gained weight, the CBN has become less aggressive with FX sales.
However, the authority was forced to pump hard currency into the official window as the naira exchange rate worsened. The naira depreciated by ₦6.76 to ₦1,454.18/$ in the official market on Wednesday, updated FX data released on the CBN platform showed.
The official spot rate neared an intraday high of N1460 despite FX injection by the Apex Bank. Naira also lost ₦5.00 to close at ₦1,460.00/$ in the parallel market. Consequently, the market spread narrowed to 0.40%.
Elsewhere, new data from the CBN showed that external reserves increased to $44.045 billion during the week. In a speech, Yemi Cardoso, Governor of the CBN, told a forum Nigeria’s external reserves print at $46.7 billion, its highest level in the last seven years.
The build-up reflects renewed investor confidence and stronger oil receipts, analysts said.
Nigeria’s foreign reserves now provide 10.3 months of import cover, boosting external stability, TrustBanc Financial Group Limited said in a note. “A stronger reserve position has helped narrow the FX market premium to below 2%,” the investment firm added. GTCO Slides Amidst Multiple Block Transactions
