CBN Sells US Dollars to Banks at N1630
With a single focus to keep exchange rate volatility in check, the Central Bank of Nigeria (CBN) conducted weekly FX intervention sales to deposit money banks at N1630 per US dollar as the market appears to have discovered the true value of the local currency.
The exchange rate at the official window crossed a new red line in the just concluded. This attracted fresh intervention in the currency market, and yet, spot rates ended negative week on week.
Details from the FX sales revealed that the Apex Bank is reducing the amount of US dollar sold to banks on a consistent basis even with sustained growth in the nation’s foreign reserves.
The appetite to keep spending on the naira is weak, analysts said in a chat, noting that Nigeria’s lower export receipt is a downside to the CBN willing buyers and willing sellers, which appears to have been jettisoned .
The CBN had indicated it has zero intention to defend the local currency in the forex market. However, while looking for true value, exchange rates began to run wild. In its latest FX auction sales, FX sales to authorised dealer banks was reduced to $77 million despite noticeable US dollar shortage in the official window.
The CBN defended the naira in the official window twice last week. Its first FX auction sales were $47 million, while the second US dollar sales were worth $30 million at the rate of N1630.
The apex bank will begin to test run its automated forex trading platform ahead of the December 2024 rollout plan. The authority, as part of effort to boost market confidence and eliminate sharp practices, launched a plan to automate FX sales
While the final rollout is scheduled to be in December, the CBN has indicated plans to test run the platform for earlier observation. Recent FX auctions have been underwhelming in terms of size, considering huge US dollar shortage in the official window.
There is an observation that the grossly underpriced dust has settled at the CBN sold naira at higher spot rates, in contrast to previous trend. MarketForces Africa reported that the Apex Bank conducted FX sales three times in the previous week, selling $148 million in total to authorised dealers.
Despite auctions, Nigeria’s foreign reserves grew for the ninth consecutive week by USD 326.64 million to US$ 39.77 billion. #CBN Sells US Dollars to Banks at N1630 Naira Rises against US Dollar Ahead of Sept. FX Auction
