Naira Plummets, CBN Intervenes in FX Market 3 Times
The Nigerian naira lost against the dominant U.S. dollar across foreign exchange markets despite the fact that the Central Bank (CBN) conducted FX intervention sales three times in a week.
The local currency depreciated by 33 basis points week on week to close at N1,540 per US dollar, with transactions settling between N1,520 and N1,549 in the autonomous FX market.
Strong demand for foreign currency in the official window caused the naira to lose N5 on each US dollar traded. Forex market liquidity was strong, albeit insufficient to give the local currency an additional boost like previous experience early in December.
Exports took US dollar inflows through the official market, boosting the supply side, and the Nigeruan central bank conducted foreign currency auction sales to local deposit banks three times to increase foreign currency liquidity.
The Apex Bank sold about $28.5 million at the open FX auction sales to local banks. Midweek, the CBN sold $61.1 million, and on Friday, another $35 million was sold to authorised dealers.
Overall, the authority defended the naira from falling freely with $124.6 million. In the parallel market, the naira also lost N135 as the exchange rate closed at N1650 on the back of an increased US dollar demand.
The exchange rate position in the official and parallel markets widened spread between the two markets to N110, or 7.14%, analysts said. #Naira Plummets, CBN Intervenes in FX Market 3 Times Reforms: Fitch Revises Nigeria’s Outlook to Positive
