Naira Rises by 6% as CBN Sells $24m in FX Market
The Nigerian naira exchange rate recorded a large daily appreciation in the forex market as the apex bank intervened in the currency market by selling the US dollars below the official spot rate to authorised dealers.
According to FX data from the FMDQ platform, the naira closed at ₦1,500.32 per US dollar, appreciating by 6.05% from the previous close.
The Central Bank of Nigeria (CBN) conducted forex market intervention sales on Monday, selling $24 million at a range of N1,495- N1,510 to local deposit money banks and others to reduce the prevailing FX liquidity challenge.
In the parallel market, the naira strengthened by 4.00%, ending the day at an average of ₦1,535 per US dollar, according to a channel check conducted in the informal currency market.
Analysts attributed the exchange rate improvement to the CBN’s FX sale of $20,000 to eligible bureau de change (BDCs) in the informal market to curb the growing demand for the US dollar.
The apex bank has announced plan to begin forex market intervention. The CBN took decision after noticing that the local currency has failed to recalibrate against the stronger US dollar across the informal, and official FX market due to liqudity shortage.
Critics maintained that the naira cannot stand alone without the apex bank preiodical FX intervention to provide cushion against dominant US dollar in the forex markets. The worsening FX rates last seen last week forced the CBN decision to rethink decision not to sippport the local currency.
In the global commodity market, oil prices declined, as investors looked past U.S. president Joe Biden’s decision not to seek a second term and focused on rising stockpiles and signs of weak demand.
Brent prices declined by 0.25% to $82.42, while WTI prices fell by 0.09% to $80.06. Also, the price of gold declined by 0.26% to $2,392.60 per ounce. #Exchange Rate Improves by 6% as CBN Buys Naira With $24m Nigeria, Angola Inflation Highest in Frontier Markets -Report
