April 17, 2024

CBN distributes Over $300 Million to Stabilize Naira Amid Exchange Rate Challenges

 

 

The Central Bank of Nigeria (CBN) has reportedly sold over $300 million into Deposit Money Banks (DMBs) over the past two weeks. The Association of Corporate Treasurers of Nigeria (ACTN) disclosed this in an advisory memo to its members, emphasizing the urgency to stabilize the exchange rate.

 

The CBN distributed over $200 million to banks at rates below N1,500/dollar last week. Additionally, this week witnessed consecutive days of CBN selling foreign exchange (FX) to banks, with rates reportedly around the $1,450 range. The ACTN aimed to keep its members informed in light of the escalating fall in the naira’s value.

 

Confirming the development, an executive committee member of the ACTN stated that the information in the memo is accurate and sourced from the CBN. This move by the CBN follows the rapid depreciation of the naira in recent weeks, starting the year at N891/$ and facing challenges in both official and parallel markets.

 

Efforts to curb the naira’s decline included a joint operation by the CBN and the Economic and Financial Crimes Commission (EFCC) targeting street currency traders in Abuja. The raid contributed to a temporary appreciation of the naira in both official and parallel markets.

 

As of Monday, the naira strengthened against the dollar, closing at 1,582/$ in the official market. However, at the parallel market, it slightly dipped to a range between N1,555/dollar and N1,560/dollar, influenced by market sentiment. The recent value increase was attributed to market sentiment as the EFCC continued its crackdown on black market operators in Abuja and Lagos.

 

The CBN’s recent initiatives include revised operations for International Money Transfer Operators (IMTOs) and the cancellation of cash payments for Personal and Business Travels, directing electronic channels for allowances. The Federal Government is also working to raise $10 billion to enhance liquidity in the foreign exchange market. Additionally, measures have been taken to block online platforms, including Binance, Forextime, OctaFX, and others, to curb alleged forex market manipulation. The EFCC has been actively arresting illegal Bureau de Change operators engaged in currency speculation to combat currency racketeering.

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