CBN Moves To Strengthen Naira, Sells 1.5Million US Dollars At Interbank Forex Market

cbn sells dollar to strengthens naira

August 31, 2016 – The Central Bank Of Nigeria Moves To Strengthen Naira, Sells 1.5Million US Dollars At Interbank Forex Market

The CBN sold around $1.5 million at the interbank forex market yesterday to support the naira and ensure the closing rate stabilises, traders said.

The naira closed at N305.50 to the dollar on the interbank market, same level it has traded since last week, having touched N325.50 a dollar intraday, but gained after the CBN’s intervention.

Traders said the naira had consistently closed around N305.5 to the dollar since August 22, an indication that the apex bank is concerned about a particular price range for the local currency.

“Actually, we don’t expect the central bank to continue to keep the rate at this level considering what the demand is … but it seems they (central bank) are concerned about a particular closing rate,” one senior currency dealer said. Last Monday, the currency market registered $327 million worth of trades, about six times more than its usual volume.

That included a single $270 million transaction at 345 naira per dollar, by foreign investors buying local currency bonds.

Average trading is around $50 million a day on normal days. It might reach $100 million on days the central bank intervenes in the currency market.

Traders said dollar shortage remains a major concern in the market even with the daily intervention by the central bank and a pocket of flows from offshore investors. The naira traded at a fresh record low of 418 to the dollar on the parallel market, against 414 a dollar on Monday.

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7 thoughts on “CBN Moves To Strengthen Naira, Sells 1.5Million US Dollars At Interbank Forex Market

  1. Making move to strengthen our already weak naira is a welcome news from the Nigerian CBN. The weakness of our currency is not in the nation’s best interest as it has seen many goods and products in the markets skyrockets in price making importation to the country more harder than ever.

    Currency devaluation is really not the best monetary policy we should adopt as a nation because except for oil we have no goods to export in order to rip the full benefit of such devaluation. We can only cause damage to our economy by adopting such devaluation policy. The devaluation of china currency today favor that country because they build on other numerous natural resources to race the nation’s revenue thereby making export more cheaper for the exporters. So what worked for them can’t work here in terms of such monetary policy of our naira devaluation.

    So the best strategy for the country is the strengthening of our naira and ensure that we tap from other mineral resources in each state and invest more on agricultural project across the country in order to boost our export. And the rate of unemployment will also reduce dramatically. It is only by then we can now see the sharp recovery of our weak economy.

  2. The shortage of dollars can also be checked on the long term by improving the general security situation in the country. Insecurity impacts on so many things. Investors do not come into the country; people already in the country desperately try to leave and will pay undeserved sums in our local currency to ensure they get dollars to travel out. It is a vicious circle really. Let’s hope our usual Naija resilience will by God’s Grace see us through.

  3. How will the sell of 1.5m usd help anything? One businessman in nigeria needs more than that to transact his business. One of the move, Nigerian Government has to make is to allow people to receive money in dollars from western union transfer from overseas. That way, dollars will flood the system and the rate dollar to naira will drop.

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