Central Bank Sells $48m Banks to Defend Naira
The Central Bank of Nigeria (CBN) towards what appears to be the last lap of its intermittent weekly FX intervention in the official market sold $48 million to authorised dealer banks ahead of an automated FX trading platform.
The amount of US dollar auctioned is expected to improve FX liquidity position in the official currency market and keep naira’s free falling in check. FX intervention at the Nigerian autonomous foreign exchange market has been on decline since the Apex Bank revealed a plan to automate trading NGN USD pairs on the Blommberg platform.
Reduce FX liqudity has caused the local currency to lose its strength against the dominant US dollar across the forex markets. MarketForces Africa reported that the CBN slowed down FX intervention by 30% last month despite rising gross balance in the nation’s foreign reserves.
The Nigerian government has also gotten approval for $2.2 billion in external borrowings. On Wednesday, the CBN intervened in the FX market, selling $48 million to banks, TrustBanc Financial Group said in its market update.
Nigeria’s gross external reserves closed at $40.26 billion while oil prices declined, trading between $72-75 per barrel range. Market anticipates that FX trading using the Bloomberg BMatch System would increase transparency and boost investors confidence. Naira Plunges on Suboptimal FX Intervention
