The Central Bank of Nigeria recently sold U.S. dollars to Bureaux de Change (BDC) at a flat rate of NGN1,450 per greenback. The central bank stated that eligible BDCs can sell the dollars to end-users at a margin of no more than 1.5% above the purchase exchange rate. The Nigerian apex bank disclosed that it had sold $106.5 million to 29 authorized dealer banks at exchange rates ranging from NGN1,498 per dollar to NGN1,530 per dollar.
Nigeria Acts to Defend Naira After Currency Hits New Record Low
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Naira Hits New All-Time Low Against Dollar
The Nigerian Central Bank (CBN) recently sold U.S. dollars at an exchange rate of NGN1,450 per greenback to Bureaux de Change. The CBN’s intervention came shortly after the naira reportedly reached an all-time low of NGN1,640 per dollar.
According to an update released by the CBN on July 18, ongoing distortions in the retail market prompted the central bank to act. These distortions feed into the foreign exchange parallel market, further widening the exchange rate premium. The CBN added:
To this end, the CBN has approved the sales of FX to eligible Bureau de Changes (BDC) to meet the demand for invisible transactions. The sum of $20,000 is to be sold to each BDC at the rate of NGN1,450/$ (representing the lower band of the trading rate at NAFEM in the previous trading day).
The Central Bank of Nigeria (CBN) added that eligible BDCs can sell the dollars to end-users at a margin of not more than one point five percent of the purchase exchange rate.
Central Bank Injects More Than $100 Million
Meanwhile, in a circular released on July 19, the CBN sought to assure the Nigerian public that it was taking steps to contain the naira’s depreciation, which it blamed on demand pressure from corporate entities. To support claims it is attempting to stabilize the foreign market, the Nigerian apex bank disclosed it had sold $106.5 million to 29 authorized dealer banks at exchange rates between NGN1,498 per dollar and NGN1,530 per dollar. These sales were conducted on July 18 and 19.
Additionally, the CBN revealed that an extra $9.5 million was sold to four authorized dealer banks at rates between NGN1,510 and NGN1,550 on July 19. Despite taking measures to contain the naira’s slide, the central bank stated that it would continue monitoring whether players in the foreign exchange market adhere to regulations.
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