CBN injects $106.5m into FX market to counter demand surge

Business a.m.

In a move to curb volatility in the foreign exchange market, the Central Bank of Nigeria (CBN) said that it sold a total of $106.5 million to authorised dealers over two days. The transactions, which took place on Thursday, July 18, and Friday, July 19, 2024, were aimed at stabilising the Naira and bolstering confidence in the local currency amid growing demand for foreign currency.

The CBN attributed the recent volatility in the foreign exchange market to increased demand for foreign currency from corporate entities and the seasonal uptick that typically occurs during the summer months.

To tackle these challenges, the CBN said it has initiated a series of regular foreign exchange sales through its network of authorised dealer banks and licensed Bureaux De Change (BDCs), providing much-needed liquidity to the market. This targeted intervention aims to ensure the availability of foreign currency and mitigate the adverse effects of demand shocks on the stability of the Nigerian financial system.

The apex bank also disclosed that it will continue to provide liquidity support to the various segments of the official markets over the coming weeks.

In its latest round of sales conducted on July 18 and 19, a total of $106,500,000 was sold to 29 authorised dealer banks at exchange rates ranging from N1,498.00 to N1,530.00 per dollar.

Expanding on its efforts to stabilise the foreign exchange market, the CBN said it also purchased $9,500,000 from four authorised dealer banks at exchange rates ranging from N1,510.00 to N1,550.00 per dollar.

Omolara Omotunde Duke, the director of financial markets, CBN, underscored the bank’s commitment to enforcing ethical standards and compliance with existing trading rules and regulations among authorised dealer banks, in a bid to maintain stability in the foreign exchange market.

Speaking on behalf of the CBN, Duke stated: “Additionally, the CBN will continue closely monitoring compliance with existing trading rules and regulations by authorised dealer banks to promote ethical conduct and support the drive to achieve stability in the foreign exchange market.”

To this end, the CBN advised the general public  to direct their foreign exchange demand to their banks and BDC operators in accordance with prevailing market regulations.