In a bid to stabilize the fluctuating naira-dollar exchange rate, the Central Bank of Nigeria (CBN) has injected over $300 million into Deposit Money Banks (DMBs) in the past fortnight.
This move comes amidst growing concerns over the rapid depreciation of the naira, which saw rates soaring as high as N1850/$ at the official market.
CBN Boosts Dollar Supply to Stabilize Exchange Rate
According to an advisory memo from the Association of Corporate Treasurers of Nigeria (ACTN), the CBN sold significant amounts of foreign exchange to banks below the N1,500/dollar mark, a proactive step to mitigate the currency’s decline.
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An executive committee member of ACTN, speaking on anonymity, confirmed the authenticity of the memo, emphasizing the importance of keeping members informed amid the currency’s volatility.
EFCC Raids Boost Naira’s Gain
The recent appreciation of the naira against the dollar was catalyzed by joint efforts between the CBN and the Economic and Financial Crimes Commission (EFCC). Following raids on currency traders in Abuja suspected of speculative activities, the naira witnessed a surge in value, both at the parallel and official markets.
Last Thursday and Friday, the naira strengthened against the dollar, reaching N1,582/$ at the official market’s close on Monday, marking a 0.75% increase from previous rates. Although the black market saw a slight dip to between N1,555/dollar and N1,560/dollar, the overall sentiment favored the local currency’s appreciation.
CBN Implements Stringent Measures for Market Stability
To sustain the positive momentum and curb currency speculation, the CBN has initiated stringent measures targeting various sectors of the foreign exchange market. Notably, the revision of operations for International Money Transfer Operators (IMTOs), restricting services to inbound transfers with mandatory naira payouts, has had a significant impact.
Additionally, the cancellation of cash payments for Personal and Business travel, and directing all allowances to be processed electronically, aim to promote transparency and accountability.
The Federal Government’s commitment to raising $10 billion to bolster liquidity in the forex market underscores a concerted effort to address economic challenges.
Furthermore, recent actions to block online platforms of crypto firms, including Binance, and clamp down on illicit Bureau de Change operators, reflect a multifaceted approach to combat currency racketeering and market manipulation.
Overall, as the CBN continues its intervention strategies and collaborative efforts with regulatory agencies, the naira’s recent gains signal a positive trajectory toward exchange rate stability and economic resilience.