CBN sells $106.5m to 29 FX banks, blames demand pressure for naira’s fall

The Central Bank of Nigeria (CBN) has announced the sale of $106.5 million worth of foreign exchange (FX) to 29 foreign exchange dealer banks.

In a statement signed by Dr. Omolara Omotunde Duke, Director, Department of Financial Markets, it was revealed that on July 18 and 19, 2024, the CBN sold $106.5 million to 29 licensed dealer banks at exchange rates ranging between N1,498/$1 and N1,530.00/$1 and purchased $9.5 million from four licensed dealer banks at exchange rates between N1,510/$1 and N1,550/$1.

The statement said: “Over the coming weeks, the CBN will continue to support various segments of the official markets with liquidity.

“Pursuant to the foregoing, the CBN sold on Thursday, July 18, and Friday, July 19, 2024, a total sum of US$106,500,000.00 (One Hundred and Six Million, Five Hundred Thousand United States Dollars only) to 29 (Twenty-nine) Authorized Dealer Banks at an exchange rate range of N1,498.00/US$1 to N1,530.00/US$1. In addition, it purchased US$9,500,000 (Nine Million, Five Hundred Thousand Dollars) from 4 (Four) Authorized Dealer Banks at exchange rates between N1,510.00/US$1 and N1,550.00/US$1. The value date of all transactions is July 19, 2024.”

CBN blames demand pressure for naira’s fall

The exchange rate in the Nigerian Autonomous Foreign Exchange Market The window (NAFEM) closed at N1,596.92/$1 on Friday, depreciating by 1.88%.

In Friday’s statement, the CBN attributed recent movements in the foreign exchange market to pressure from corporate demand and the summer seasonal surge.

The CBN also said it has initiated regular sales of foreign exchange through licensed dealer banks and licensed bureaux de change (BDCs) to stabilise the market and ensure liquidity.

The statement noted: “The Central Bank of Nigeria (CBN) wishes to inform the general public that recent movements in the foreign exchange market are largely driven by demand pressure from corporate entities and the expected seasonal uptick during the summer period.

“The CBN therefore wishes to assure the general public that it has commenced regular sale of foreign exchange through licensed dealer banks and licensed bureaux de change (BDCs) to enhance supply in the foreign exchange market in line with its mandate of price stability and commitment to ensuring a well-functioning and liquid market.”

The central bank noted that it is closely monitoring compliance with business rules and regulations to promote ethical conduct and achieve market stability. The public is advised to direct foreign exchange requests to their banks and BDC operators in accordance with market regulations.

What you should know

• This is the second time the CBN has conducted forex sales to authorized dealers this month as the naira struggles under demand pressure.

• The CBN has also announced the approval of the Sales of foreign exchange to eligible BDCs to meet demand for invisible transactions In a decisive step to strengthen the naira. eitherOn Thursday, July 18, 2024, the bank announced that the sum of $20,000 will be sold to each BDC at a rate of N1,450/$1. This rate represents the lower band of the trading rate at NAFEM on the previous trading day.