See why naira is likely to improve against the US dollar in forex markets

• The CBN is determined to halt the depreciation of the naira in both the official and unofficial forex markets
• The latest move involves selling dollars at a retail auction today after listing outstanding FX demand from banks
• Despite selling $369 million in July, the naira continues to fall, prompting the CBN to switch to retail auctions

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

The Central Bank of Nigeria (CBN) hopes to stop the naira's poor performance in the foreign exchange market.

Data from FMDQ Securities showed that the dollar is selling for over N1,600 exchange rate in the Nigerian Autonomous Foreign Exchange Market (NAFEM), which is the official market.

CBN hopes to crash dollar rates Photo credit: CBN
Source: Getty Images

The naira is facing significant pressure due to seasonal demand from summer tourists and importers.

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In the last year, naira has depreciated against the US dollar by more than 70%.

CBN plans to bring the exchange rate down

The apex bank is hoping that selling dollars at a retail auction today will halt the trend of naira depreciation.

BusinessDay reports that already the CBN has received a list of all outstanding FX demand by end-users from authorised dealer banks after telling banks in a circular that it was diverging from the usual wholesale auctions to banks.

A circular by CBN said that the change is in response to the “growing unmet foreign exchange demand”

Historically, the central bank has utilised both retail and wholesale currency auctions to supply dollars to the market. The retail auction directly serves customers, while the wholesale auction provides dollars to banks.

The CBN sold $369 million in the month of July 2024 while buying less than $20 million from the deposit money banks, which failed to give the desired effect.

The CBN will be hoping that its change of tactics will yield the desired results and bring the naira below N1,600.

CBN sells dollar to BDCs

Earlier, Legit.ng reported that the CBN carried out another round of forex sales on Thursday to licensed Bureau De Change Operators in the country.

Each BDC received $20,000 as the CBN bid to reduce the exchange rate at which the dollar is sold on the street.

The CBN also instructed that the BDCs resell to eligible end-users at a margin not more than 1.5 per cent above the purchase rate.

Source: Legit.ng