The Central Bank of Nigeria (CBN) intervened five times in the FX market as a result of the foreign currency scarcity pressure.
A report noted that the apex Bank injected $33 million to boost FX liquidity in the market as a response to negative exchange rate movement. The CBN decision to sell the US dollar was connected to sustained decline in the value of naira to US dollar and other currencies in the forex market.
The naira, however, remained depressed as demand for foreign currency outweighed the volume of US dollars available.
The apex bank reiterated its decision to stick to its willing buyer, willing seller fx policy following criticism that the monetary authority used Nigeria’s external reserves to defend the naira in April.
“The apex bank market intervention was supported by improved inflows from foreign portfolio investors following attractive rates on OMO bill sales.”
The monetary authority sold the US dollar to help keep the exchange rate steady ahead of its payment obligation on its maturing non-deliverable forwards in the financial market last week.
The apex bank’s rapid response intervention came after it successfully stemmed pressures that would have emanated in the currency market following $1.3 billion in non-deliverable forwards that matured in the latter part of May, 2024.
“A run on the naira exchange rate was stepped down with open market operation (OMO bills) sales on Monday. The CBN floated its eighth OMO auction of the year, offering instruments worth N500.00 billion.”
“The CBN’s OMO issuances after the USD1.30 billion non-deliverable forwards matured on 29 May forestalled demand pressure that could have resulted in the weakening of the naira”, Cordros Capital Limited said in its market note.
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