Business a.m.
The Central Bank of Nigeria (CBN) has committed $581 million to foreign exchange interventions at the Nigeria Autonomous Foreign Exchange Market (NAFEM) in the first few months of 2024, according to data released by the FMDQ Securities Exchange.
Despite the significant FX interventions by the Central Bank of Nigeria in NAFEM, only a minuscule portion of the country’s total market turnover was attributed to the apex bank’s actions, as per recent data from the FMDQ Securities Exchange.
According to the exchange’s figures, the CBN’s sales of $581 million accounted for just 3.2 per cent of the total market turnover of $17.938 billion, indicating that the CBN’s actions have had a limited, yet strategic, impact on Nigeria’s FX market.
In addition to the foreign exchange interventions in NAFEM, the Central Bank of Nigeria (CBN) has also resumed dollar sales to Bureaux de Change (BDCs) after a brief hiatus. The apex bank sold roughly $60 million to BDCs in the past two months, adding to the evidence that the naira’s recent appreciation against the dollar is not solely a result of CBN’s interventions in the market.
Recent data from the CBN indicates a marginal decline in the country’s foreign exchange reserves, which stood at $32.29 billion as of April 15, 2024, compared to $34.45 billion recorded on March 18, 2024. This development, despite the CBN’s relatively conservative interventions in the foreign exchange market, underscores the volatility of the global financial landscape, even as the apex bank continues to navigate the challenges of maintaining a stable and sustainable naira exchange rate.
At the IMF and World Bank Spring Meetings in Washington, DC, Olayemi Cardoso, the CBN governor, attributed the recent decrease in the nation’s foreign exchange reserves to debt repayments, highlighting the importance of maintaining credibility in the international financial markets.
According to Cardoso, the shifts in the country’s reserves reflect the necessary payments that any country must make to fulfill its financial commitments, which is essential in preserving the country’s credibility in the global financial landscape.
Cardoso also clarified that the recent interventions in the NAFEM were not being financed through the depletion of the country’s external reserves.
In his statement, the CBN governor asserted that the CBN’s strategy of foreign exchange interventions was aimed at boosting market liquidity and promoting stability, without jeopardising the nation’s strategic reserve of foreign currency.
