The Central Bank of Nigeria (CBN) sold nearly $90 million in the spot FX market on Tuesday, marking its return to dollar sales after a hiatus since September 2023.
According to sources familiar with the matter, the CBN offered the dollars at a favorable rate of N1490 per dollar, with a majority of the 34 bidding banks acquiring between $2-5 million each.
This strategic sale aims to bolster dollar liquidity in the market and rejuvenate the performance of the naira, which has faced challenges as one of the weakest currencies globally this year.
Contrary to fixing rates, the CBN opted for a free bidding process among banks, which is viewed positively for market dynamics, as per insider insights.
The decision to resume spot market interventions comes after the CBN had paused sales to address a backlog in foreign exchange demand, which had been denting investor confidence in the apex bank’s currency reforms.
While the latest intervention marks a crucial step, analysts emphasize the importance of consistent and professional conduct in future sales to fully leverage the benefits of such interventions.
The CBN’s return to the market has already spurred trading liquidity, although it remains below the daily average sales witnessed last year.
With the naira showing signs of improvement post-intervention, observers are keen to see a sustained pattern in CBN’s sales, which could influence the trajectory of exchange rates in the coming days.
However, concerns persist over the transparency of Nigeria’s external reserves data, particularly after revelations casting doubts on the accuracy of reported figures.
As the CBN strives to address overdue dollar obligations and rebuild investor trust, transparency around reserve levels remains crucial for a comprehensive assessment of Nigeria’s external position.
