CBN reveals why it sold forex to authorised dealer banks in 11 days

• The Central Bank of Nigeria has disclosed that it carried out FX sales to authorised dealer banks in September
• According to the bank, within 11 days, it sold about $543 million to banks at an average of N1,540 and N1,580
• The bank said it sold the forex to reduce the demand for FX and control market volatility

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

The Central Bank of Nigeria has stated that it sold about $543.5 million at N1,540 and N1,580 per dollar to dealer banks between September 6 and 30, 2024, the equivalent of N844.92 billion.

The apex bank said this in a statement signed by Omolara Duke, its Director of Financial Markets Department, in Abuja.

Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso Credit: Bloomberg/Contributor
Source: Getty Images

Naira experienced the highest crash in September

She disclosed that the bank conducted the sale through two-way quotes in the FX market to reduce observed volatility caused by high FX demand for commodity import and season forex demand.

The CBN official explained that the bank sold the amount to an average of 26 authorised dealer banks in 22 days.

The naira rose by only 2.77% to N1,541 in the official window but hit its lowest value in September, closing at N1,700 per dollar in the parallel market.

According to the CBN statement, FX spot sales were to reduce market volatility caused by high demand for import and seasonal FX demand,

Duke said the release is to educate and guide the general public on the pricing of forex and the range of sales it made to banks within the period.

The naira’s declining value has caused concerns among Nigerians, as it is used as a benchmark for prices of essential goods.

Breakdown of FX sales by CBN

An analysis of the amount on each trading shows that the apex bank sold $39 million on September 6 to authorised dealer banks at a range of N1,580 to N1,605.

On September 9, the CBN sold $66 million at N1,570 and N1,585 to 23 banks, and by September 11, it had increased the amount to $77 million at N1,540 and N1,575 to 31 banks.

The statement shows that the bank sold $46 million to 23 banks on September 13 at N1,540 and N1,575.

Five days later, the amount of FX sold to banks crashed to $24 million at N1,530 and N1,540 for 12 banks.

By September 19, CBN sold $28 million at N1,540 and N1,55 to 14 banks while disbursing $31 million to 14 banks at N1,540 and N1,545 on September 20.

The financial institution’s regulator sold $17.5 million at N1,540 to 10 banks on September 19.

The amount rose to $80 million on September 26, $79 million the next day, and N56 million on September 30, at N1,530 and N1,580.

Dollar crashes in official window

Legit.ng earlier reported that the Nigerian currency, the naira, gained against the US dollar in the official Nigerian Foreign Exchange Market (NAFEM) on Friday, October 4, 2024.

The naira closed the week positively, rising by 1.69% at N1,631.21 in the official window following global crude oil prices rise.

Despite a sharp decline in market turnover, the 1.69% naira appreciation contrasts with the previous day’s rate of N1,659.26.

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Source: Legit.ng