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The Central Bank of Nigeria (CBN) has injected over $300 million into Deposit Money Banks over the past two weeks in a bid to stabilize the naira-dollar exchange rate.
The Association of Corporate Treasurers of Nigeria revealed this information in an advisory memo circulated among its members, as obtained by Economic Confidential.
The memo highlighted, “We are sure you must have been following up on activities in the foreign exchange market, with rates at the official market going as high as N1850/$. If you are not aware, kindly note that the CBN last week sold over $200 million to the banks below N1,500/dollar. Similarly, this week, the CBN has on two consecutive days sold FX to banks at rates we understand to be in the $1,450 range. We hope this information helps guide your decisions regarding the rates and spreads you get from your banks.”
An executive committee member of the ACTN, speaking on anonymity, confirmed the accuracy of the memo, stating, “Everything in the memo is correct. The information is from the CBN. We just wanted to keep our members informed on what is happening.”
These dollar injections come as the naira has experienced rapid depreciation in recent weeks. Although the naira began the year at N891/$ on January 1, 2024, it has faced significant challenges at both the official Nigeria Autonomous Foreign Exchange Market and parallel markets.
However, the naira demonstrated resilience against the United States dollar at the parallel market last Thursday and Friday following collaborative efforts between the CBN and the Economic and Financial Crimes Commission to crack down on currency speculators in Abuja. This joint action also bolstered the naira’s position at the official market.
At the close of trading activities on Monday, the naira appreciated against the dollar to 1,582/$ at the official market. This represented an increase of N12 or 0.75 percent from the N1,594 recorded at NAFEM on Friday.
Despite these positive developments, the naira experienced a slight slip at the black market, ranging between N1,555/dollar and N1,560/dollar, influenced by market sentiment.
While the recent crackdown by the EFCC on black market operators has contributed to the strengthening of the naira, further measures by the CBN aimed at stabilizing the foreign exchange market have also been implemented. These measures include the revision of operations for International Money Transfer Operators and the cancellation of cash payments for Personal and Business Travels, with a directive to process allowances through electronic channels.
Additionally, the Federal Government has taken steps to improve liquidity in the foreign exchange market and combat illicit movement of funds by blocking online platforms of several crypto firms, including Binance. The EFCC has also intensified efforts to clamp down on illegal Bureau de Change operators engaged in currency speculation.
Last Wednesday, operatives of the Enugu Zonal Command EFCC, alongside other security agencies, arrested 115 suspected currency racketeers in the state as part of ongoing efforts to curb currency-related crimes.
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