Emmanuel OchayiCentral Bank of Nigeria (CBN) Moves to Stabilize FX Market with US$122.67 Million Sale
In a move to stabilize the FX market, the Central Bank of Nigeria (CBN) on Friday sold US$122.67 million to 46 authorized dealers.
This intervention aims to reduce market volatility and ensure a more stable economic environment.
Join our WhatsApp ChannelDetails of the FX Market Intervention
Omolara Duke, CBN’s director in charge of financial markets, disclosed the breakdown of the sales in a statement.
She explained, “Of the total sale, US$67.5 million was sold to 27 authorized dealers, while US$2.5 million was bought from one authorized dealer on July 10, 2024.”
The bid range for the July 10, 2024 sales was between N1,480.0/US$ and N1,500.0/US$, with a value date for payments set for July 12, 2024, following the settlement cycle of two days (T+2).
Additional Market Transactions
On July 11, 2024, the CBN further sold US$55.17 million to 19 authorized dealers at a rate of N1,540.0/US$, with no purchased on that day.
The value date for these payments is July 15, 2024.
Guidelines for FX Market Dealers
The CBN’s statement emphasized the importance of using foreign exchange purchases exclusively for trade-backed transactions.
Authorized dealers are required to report these transactions within 72 hours. “The CBN supplies foreign exchange to the market to improve liquidity through FX spot sales to authorized dealers using two-way quotes,” Duke reiterated.
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Commitment to FX Market Stability
The Central Bank assured the public of its continued efforts to maintain stability in the FX market.
“We are committed to ensuring stability in the market,” Duke stated, adding that the Bank will continue to monitor and respond to market conditions as necessary.
Implications for the Market
The CBN’s intervention is expected to provide much-needed liquidity and stability in the FX market, which has been characterized by volatility in recent times.
The move demonstrates the Bank’s proactive approach to managing the country’s foreign exchange resources.
Market Reactions and Expectations
Market analysts have responded positively to the CBN’s intervention, viewing it as a step towards achieving a more stable market.
“This move by the CBN is crucial in mitigating volatility and ensuring a stable exchange rate environment,” commented an economic analyst.
Future Outlook for the FX Market
As the CBN continues to implement measures to stabilize the FX market, stakeholders remain optimistic about the future.
The Bank’s consistent interventions are seen as vital in fostering a more predictable and stable economic landscape.
The Central Bank of Nigeria’s recent intervention in the market, involving the sale of US$122.67 million to authorized dealers, underscores its commitment to promoting stability and reducing volatility.
This move is a step towards ensuring a more robust and predictable market, benefiting both the economy and market participants.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
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