CBN Offloads More Than $300 Million to Banks as Naira Strengthens

The Central Bank of Nigeria has injected over $300m into Deposit Money Banks in the last two weeks as part of desperate efforts to stabilize the naira-dollar exchange rate.

The Association of Corporate Treasurers of Nigeria disclosed this information in an advisory memo that was shared with its members.

The memo stated, “We are sure you must have been following up on activities in the foreign exchange market, with rates at the official market going as high as N1850/$."

“If you are not aware, kindly note that the CBN last week sold over $200m to the banks below N1,500/dollar. Similarly, this week, the CBN has on two consecutive days sold FX to banks at rates we understand to be in the $1,450 range. We hope this information helps guide your decisions regarding the rates and spreads you get from your banks.”

An executive committee member of the ACTN, who requested anonymity, mentioned that the memo was distributed to ACTN members to assist in decision-making during the significant decline in the value of the naira.

He mentioned that all the details in the memo are accurate and the information is sourced from the CBN, but their intention was simply to keep our members updated on the current events.”

On the heels of rapid depreciation of the naira in recent weeks, the dollar sales occurred. As of January 1, 2024, the naira started the year at N891/$, but has faced several setbacks at both the official Nigeria Autonomous Foreign Exchange Market and parallel markets.

However, the local currency saw an appreciation against the United States dollar at the parallel market last Thursday and Friday following a joint operation by the CBN and the Economic and Financial Crimes Commission to crackdown on currency traders in the streets of Abuja. Speculation against the local currency was believed to be carried out by the currency traders. At the official market, the local currency also strengthened.

At the close of trading activities on Monday, the naira saw an appreciation against the dollar to 1,582/$ at the official market.

According to data obtained from FMDQ securities, the increase was N12 or 0.75 per cent from N1,594 recorded at NAFEM on Friday.

At the black market, the naira slipped slightly to between N1,555/dollar and N1,560/dollar, following market sentiment.

After EFCC raids on currency speculators, the local currency, which had dropped to 1,900/dollar on Thursday, rose to 1,500/dollar on Friday.

However, the local currency slightly depreciated against the dollar at N1,555/$ on Monday evening, as per data collected from some street traders.

Due to market sentiment, the increase in naira value was a result of the EFCC's ongoing crackdown on black market operators in Abuja and Lagos.

After conducting enquiries, it was revealed that sales were conducted at the offices of the currency traders as stipulated by the CBN.

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