CBN PUMPS $500 MILLION INTO FX MARKET TO STOP NAIRA DECLINE

...As the Naira Trades at a Parallel Market for $1500

LAGOS: On Monday, the Central Bank of Nigeria (CBN) said that it had added million to the FX market in an effort to reverse the declining value of the naira.

The operation is intended to reduce the backlog of valid FX, or forex, transactions.

This is just one week after the bank made an over $2 billion investment in the manufacturing, petroleum, and aerospace sectors.

Mrs. Hakama Sidi Ali, CBN's corporate communications section, made this statement on Monday in Abuja.

She reiterated the bank's commitment to backlogs. She said, The CBN's management is dedicated to clearing all.

Additionally, Sidi Ali assured Nigerians that the CBN is implementing a comprehensive plan to boost short-, medium-, and long-term liquidity in the FX markets.

The CBN spokeswoman said that they have long hindered the Nigerian FX markets' ability to function effectively.

“As the governor said, the CBN's focus is on the markets' effective operation over the years,” the speaker went on to say.

Sidi Ali claims that the changes made to the forex market are meant to increase openness, reduce opportunities for arbitrage, and simplify. She assured that a confidence and will attract more international investment.

She said, “It will increase investor confidence and draw in foreign investment.”

All parties participating in the market adhere to the rules. According to the speaker, there will be market transparency, which will help all businesses.

Sites in Lagos, the dollar was selling for between N1500 and N1600 by 12 p.m.; by 4 p.m. on Monday, it had dropped to between N1455 and N1500.

Jubril Kalamu, an Ikeja currency broker, said that although there were a lot of dollar demands in the market in the morning, by the afternoon it was same with the previous ones.

“As I speak with you, the dollar is between N1455 and N1500, but it was higher in the morning at about N1600,” he said.

When asked what was driving the lack of dollars in the market, Kalamu said, “We are not really sure.” We're not happy either.

The CBN's present engagement is one of the steps the bank has been taking in recent months to reduce the currency backlog.

Over the past few months, the bank has disbursed varying amounts in an effort to clear the backlog, the CBN reported that it has done $2 billion in past-due FX futures in the last three months.

In addition, the CBN recently gave $61.64 million to foreign airlines who wants their money back from Nigeria. The value of Nigeria's naira is impacted, even in the face of these attempts.

The naira could reach the N2000 to dollar exchange mark in a few months, according to financial experts who spoke with Daily Independent over the weekend. This is because the currency keeps losing value on both the official and black markets, even with the CBN's best efforts.

The value of the naira on December 31, 2023, was N1120/$. It fell to N1400 on the black market on Friday, January 26, 2024, a fall of N200, or 16.6%. At the official market, on December 31, 2023, it was worth N898 to the dollar; on Friday, its value was N910.

In intraday trading on both the official and alternative markets, the value of the naira dropped to a record low once more. The naira fell to a low of N789 per dollar in the official market, or roughly N1399 per dollar, a decline of 16.55 percent.

The value of the naira experienced a historic slide on the Nigerian foreign currency market last week, peaking at N1399 per dollar in the official market on Thursday, January 14.

According to FMDQ data, there was a notable 6.15 percent decline from the N1313 rate that was seen during intraday trade the day before.

In the official market, the naira fell hard. The dollar was quoted at N789 on Thursday, January 25, 2023, as opposed to N700 on Wednesday, January 24, 2024, marking a notable 11.28% decrease from the intraday low.

The naira dropped from N882.24 on Wednesday, January 24, 2024, at NAFEM to finish at N900.96 per dollar at the end of trade, down 2.08 percent.