Amidst concerted efforts to stabilize the naira-dollar exchange rate, the Central Bank of Nigeria (CBN) has injected over $300 million into Deposit Money Banks (DMBs) over the past two weeks. This move aims to address the recent volatility in the foreign exchange market.
The Association of Corporate Treasurers of Nigeria (ACTN) revealed this development in an advisory memo disseminated to its members. According to the memo obtained by The PUNCH, the CBN sold over $200 million to banks last week at rates below N1,500 per dollar. Similarly, in the current week, the CBN has conducted FX sales to banks at rates approximately in the $1,450 range.
An executive committee member of the ACTN, speaking on condition of anonymity, confirmed the authenticity of the memo, stating that the information was sourced directly from the CBN. The dissemination of this information aims to provide guidance to ACTN members amidst the recent downturn in the naira’s value.
The recent dollar sales follow a period of rapid depreciation of the naira, which began the year at N891/$ and has since experienced significant fluctuations in both official and parallel markets. However, last Thursday and Friday, the naira appreciated against the dollar in the parallel market following joint operations by the CBN and the Economic and Financial Crimes Commission (EFCC) targeting currency traders in Abuja. This enforcement action was aimed at curbing speculation against the local currency, leading to a slight strengthening of the naira in both the official and parallel markets.
At the close of trading activities on Monday, the naira appreciated against the dollar to 1,582/$ in the official market, representing a 0.75% increase from the previous trading session. In contrast, at the parallel market, the naira traded between N1,555/$ and N1,560/$, with slight fluctuations influenced by market sentiment.
The recent rise in the value of the naira is attributed to market sentiment, driven by ongoing efforts by the EFCC to crackdown on illegal currency activities. Last week, the EFCC arrested over 250 Bureau De Change (BDC) operators in Wuse Zone 4 market, Abuja, signaling a significant pushback against illicit currency speculation.
In February, the CBN implemented various measures to address the naira’s volatility, including revising operations for International Money Transfer Operators (IMTOs) and directing electronic processing for Personal and Business Travel Allowances. Additionally, the Federal Government announced plans to raise $10 billion to bolster liquidity in the foreign exchange market and intensified efforts to combat currency racketeering through enforcement actions by the EFCC.
The recent injection of funds by the CBN underscores its commitment to stabilizing the foreign exchange market and safeguarding the value of the naira amidst ongoing economic challenges.
