CBN Offloads $30m To Banks To Back Naira

The Central Bank of Nigeria (CBN) recently took steps to support the naira by selling $30 million in foreign exchange (FX) to authorized banks at a reduced rate. This was the second FX auction this week, bringing total sales for the week to $77 million.

Despite these interventions, the amount remains too low to significantly impact the exchange rate. During Wednesday’s FX auction, the CBN sold $30 million to authorized banks at a rate of ₦1,630 per dollar, and the exchange rate stayed at a similar level that day.

However, this support was short-lived. By Thursday, the naira’s value had dropped, reaching ₦1,675 per dollar in the Nigerian autonomous FX market due to high demand. Earlier in the week, the CBN had also sold $47 million to banks at the ₦1,630 rate.

Last week, the CBN intervened three times, selling a total of $148 million to Nigerian banks to stabilize the naira. This pattern indicates that the CBN may hold another auction on Friday to manage the exchange rate.

In October, the naira’s value declined by about 8%, with a year-to-date drop of 45.86% in the official market, according to TrustBanc. Meanwhile, in the parallel market, the naira has lost 30.37% since the start of the year.