Naira strengthens as CBN pumps $86m into fx market

After crossing N1,500 at the official market, the dollar crashed yesterday trading at N1,499.07.

It would be recalled that the local currency hit an all-time low, exchanging at 1,534.39/$ at the official market on Monday before crashing to N1,499.07 on Tuesday according to the Nigerian Autonomous Foreign Exchange Market (NAFEM) which is the official forex market.   

This is just as the Central Bank of Nigeria (CBN), in a bid to stabilise the naira, sold $86m in the spot foreign exchange market.

It was the first time since September 2023 that the CBN would sell dollars directly in the spot market where the currencies are traded for immediate delivery.

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This enabled commercial banks to bid directly with each bank getting as much as $2.5m, according to several sources.

This, it was gathered, was responsible for the marginal appreciation of naira yesterday after recording the worst performance in recent weeks.  

Our correspondent reports that Monday was the first time the dollar would be exchanging at over N1,500 at the official market since the forex crisis got worse, putting more pressure on businesses, especially importers.

The local currency has defied all CBN interventions and continues to depreciate against the foreign currency.

Commenting on the latest intervention, Chief Executive Officer, Centre for the Promotion of Private Enterprises (CPPE), Dr. Muda Yusuf described the CBN’s decision to resume sale of forex in the spot market as a welcome development. He however added that the apex bank needs to do more.

“We can only hope that the Central Bank would have a bigger capacity to intervene. That is what all of us have been looking forward to. The market is such that the CBN has to play a big role in the market until such a time we have enough confidence in the market.

“Unfortunately, because of the commitment of the bank to clear the arrears and backlog, it has not been able to play this role. Now that they have started to do this, I think it is a welcome development and we look forward to much better intervention.”

Meanwhile, the Lagos State House of Assembly yesterday decried the naira depreciation and advised the federal government and the Central Bank of Nigeria (CBN) to take some bold steps to shore up the value of the naira.

Part of the resolutions by the house was that the federal government should come up with a mechanism to reduce foreign trips for seminars and conferences by ministries and agencies, adding that this should apply to states.

While stressing the need to strengthen security across the nation, the house also called on the CBN “to embark on sensitisation of Nigerians on the steps being taken by the apex bank to reduce the pressure on naira while informing on the expected roles of Nigerians at this time.”