Naira Mixed as CBN Turns Aggressive with FX Interventions
The naira exchange rates mixed across foreign exchange markets ahead of holiday as the authority flooded banks with US dollars. The Central Bank of Nigeria (CBN) embarked on aggressive US dollar sales to local banks to ease pressure on the exchange rate.
“The intention of the Apex Bank is clear: to stabilise the naira exchange rate for year-on-year performance comparison,” a senior analyst who prefers not to be mentioned told MarketForces Africa in a chat. December FX interventions mirrored previous market experience ahead of December 2nd transition to Bloomberg BMatch system.
Yesterday, the exchange rate appreciated by 7 basis points to N1540.65, according to data obtained from the FMDQ platform, while the parallel market rate settled at N1,655 per US dollar.
This means that the exchange rate depreciated by N5 per greenback in the informal currency market. The CBN has opened a window for Bureau de Change to buy up to $25,000 at the official rate from local banks.
Analysts expect this to ease pressures in the black market as a liquidity boost is expected to put speculative activities in check. Early in the week, the naira gained N4 to settle at N1,538 in the official market after the CBN conducted another FX auction sale with authorised dealer banks on Friday.
The CBN’s sustained FX intervention has reduced naira’s year-end volatility. The CBN sold $40 million to banks, bringing the total FX sales for the week to $237.7 million. In the previous week, the Apex Bank defended the naira with $124.6 million. Market analysts see the pattern as deliberate efforts to keep the naira on a good trend line for year-end.
In the autonomous FX window last month, the CBN sold over $400 million in interventions, with rates ranging from N1,640 to N1,660 across multiple sessions, AIICO Capital Limited said in a report. The interbank market, however, remained under pressure, with trades spanning N1,557 to N1,722 due to persistent demand for foreign exchange.
The investment firm said significant inflows from Foreign Portfolio Investors (FPIs) targeting high-yield government securities and exporter proceeds supported liquidity. Despite these efforts, suppliers of foreign exchange sought higher levels to sell their proceeds, reflecting persistent demand pressure in the market, analysts said.
Elsewhere, the net foreign exchange inflow to the Nigerian economy in the third quarter of the year decreased by 2.97 percent to $14.46 billion from $14.89 billion in the preceding quarter, the CBN said in the third quarter of the 2024 economic report. #Naira Mixed as CBN Turns Aggressive with FX Interventions Oil Climbs as Concerns over U.S Economic Growth Ease
