The Central Bank of Nigeria (CBN) has taken steps to reduce market fluctuations by selling $543.5 million to banks that are allowed to trade foreign currency from September 6 to September 30, 2024. This action is meant to meet the high demand for importing goods and the usual need for foreign currency during certain times of the year.
Omolara Duke, Director of the Financial Markets Department at the CBN, said that the sales happened over 11 days using a method where both the buyer and seller suggest prices at the Nigeria Foreign Exchange Market (NFEM). The goal of these spot sales was to lower market volatility, with all transactions set to be completed two days after the deal is made.
The CBN’s actions helped the Naira perform better in the official market, ending at N1,541 in September 2024. This is a small improvement compared to July and August 2024. However, in the unofficial market, the Naira dropped to its lowest level in seven months, ending at N1,700/$.
The Central Bank of Nigeria (CBN) has once again promised to help provide more foreign currency to the Nigerian Foreign Exchange Market (NFEM). They also plan to start using an electronic system to match foreign exchange transactions on December 1, 2024. This system will show prices in real-time and work with the Financial Market Dealers Association (FMDA) to create rules for how it works. The goal is to make the foreign exchange market more transparent and efficient.
Selling foreign currency to bank dealers has helped the Naira perform better in the official market. In September, the Naira had its best performance since June 2024, closing at N1,505 per dollar in the official market.
In July, the Naira closed at N1,608/$ in the official market and N1,600/$ in the parallel market. In August, the Naira closed at N1,598/$ in the official market and N1,616/$ in the parallel market.
