CBN sells $148m to 29 authorised dealers amid naira fall

The Central Bank of Nigeria has disbursed $148m to 29 authorised dealers as part of steps to stabilise the foreign exchange market amid the recent free fall of the naira.

A statement posted on the apex bank website on Friday said the sales were made to the dealers on Monday, July 22 and Tuesday, July 23, 2024, between an exchange rate of 1,470.00/$1 and 1,510.00/$1.

According to the CBN, the authorised dealers include banks and BDC operators.

This development comes two weeks after the CBN sold $122.67m to 46 authorised a move aimed at increasing liquidity in the country’s market stability and reducing volatility.

A week ago, it also announced that $20,000 was to be sold to each BDC at the rate of 1,450/$1.

Despite this move, the naira has depreciated against the United Dollars, trading above N1,600 on Thursday at the official market.

The statement read, “The Central Bank of Nigeria sold a cumulative sum of US S148,000,000.00 in the Nigerian Foreign Exchange Market to Authorised Dealers on July 22 and 23, 2024.

“The sale of foreign exchange was to 29 Authorized Dealer banks at an exchange rate of 1470.00/US$1-1510.00/US$1.”

It added that the apex bank also purchased $2m from one authorised dealer bank at the rate of 1,505.00/$.

“In addition, the CBN bought US$2,000,000.00 (Two Million United States Dollars) from one authorised dealer bank at the rate of 1,505.00/US$.

“The value dates for all the transactions held on July 22, 2024, was T+0, while that of July 23, 2024, was T+0,” it concluded.

In an interview with The According, financial analysts expressed concerns over the recent trend of high foreign liquidation in the Nigerian Exchange with N311.41bn worth of investments withdrawn in the first half of this year.

This has sparked fears of naira devaluation and its potential impact on the Nigerian economy.

According to the NGX in a report titled ‘Domestic & Foreign Portfolio Investment’, N311.41bn worth of portfolio investments liquidated in the first half of the year compared with the N73.06bn in foreign outflows recorded in the same period in 2023.

A financial analyst, Olaid Baanu, highlighted the sharp increase in foreign capital inflows to N229.07bn in the first half of the year, up from N72.02bn in the same period in the previous year, stating that this initially indicated growing interest from foreign investors and bolster market confidence.

He explained, “While the increased inflows are encouraging, the high liquidation indicates that foreign investors are cashing out their profits, which could destabilise the market.”