Victor EzejaIn an effort to foster stability and lessen market volatility, the Central Bank of Nigeria (CBN) has again intervened in the foreign exchange (forex) market, selling a total of $122.67 million to 46 authorised Bureau De Change operators.
Prime Business Africa reports that this resumption of forex sales to BDC operators comes after a four-month break.
Join our WhatsApp ChannelThe apex bank had in February resumed sales of forex to BDCs as part of its effort to curb the activities of currency speculators and boost liquidity in the forex market. It first sold $20,000 to each eligible BDC operator at N1,301/$1 and subsequently sold $10,000 to each at N1,251/$1.
The third tranche of FX sales was $10,000 to each qualified BDC operator at the rate of N1,101/$1 with a mandate to sell at a spread of not more than 1.5 per cent above the purchase price.
Confirming the latest sales, the CBN’s director of financial markets, Duke Omolara Omotunde, said the move is part of the bank’s determination to promote stability and reduce market volatility in the foreign exchange market.
“The Central Bank of Nigeria has sold the sum of $122,671,000 to 46 authorised dealers in its determination to promote stability and reduce market volatility in the foreign exchange market,” said the CBN in a sstatement released on Friday, 12 July.
Omotunde disclosed that of the total sale, US$67,500,000.00 was sold to 27 authorised dealers, while the sum of US$2.5 million was bought from one authorised dealer on 10 July 2024.
The CBN finance department director said the range of the bid for the 10 July 2024 sales was N1,480.0/US$-N1,500.0/US$, while the value date for the payments, going by the settlement cycle of two days (T+2), is 12 July 2024.
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“On July 11, 2024, the sum of $55,171 million (Fifty-Five Million, One Hundred and Seventy-One Thousand US Dollars) was sold to 19 Authorised Dealers at A1,540.0/US$ and there was no purchase of FX. The value date for the payments of the spot sale at T+2 is July 15, 2024,” the statement added.
CBN urged all authorised dealers to ensure that foreign exchange purchases from the bank “are used exclusively for trade-backed transactions, which should be reported within 72 hour”, adding that the bank will continue to ensure stability in the forex market.
CBN Intervention Amid Recent Naira Depreciation
The CBN’s latest intervention comes amid recent depreciation of the naira in both the official and parallel windows of the forex market.
According to data from the Nigeria Autonomous Foreign Exchange Market (NAFEM), where foreign currencies are officially traded, trading closed on Monday, 8th July 2024 at N1,523.85/$1. It further depreciated to N1,532.28/$1 on Tuesday, 9th July, and declined to N1,561.98/$1 on Wednesday, 10th July. On Thursday, 11th July, there was a slight appreciation as trading closed at N1,554.65/$1. However, it depreciated to N1,563.80/$1 on Friday, 12th July.
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
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