The naira reached a four-month low, fluctuating between N1,500.32 and N1,621.12, breaking through the N1,600 threshold despite efforts by the Central Bank of Nigeria (CBN) to stabilize the market through dollar sales in the month of July.
It would be recalled that Nigeria’s exchange rate ended July 2024 at N1608.73 to the dollar, reflecting 6.43 per cent depreciation in the official market for the month.
Throughout July, the CBN conducted at least three foreign exchange sales to authorized dealers and one to Bureau de Change (BDC) operators in response to the naira’s severe pressure.
These interventions appeared to boost forex turnover in the Nigerian Autonomous Foreign Exchange Market (NAFEM) window, which saw a 30 per cent increase in turnover to $4.34 billion from $3.33 billion in June.
In total, the CBN sold at least $377.17 million to authorized forex dealers during July.
The first of these sales occurred in the first week of July, with $122.67 million sold to 46 authorized dealers over two days. On the first day, the CBN sold $67.5 million to 27 dealers, purchasing $2.5 million from one dealer, with bid ranges between N1,480/$1 and N1,500/$1.
Payments for these transactions were scheduled for July 12, 2024. On the second day, $55.17 million was sold to 19 dealers at a rate of N1,540/$, with payments due on July 15, 2024.
The CBN emphasized that foreign exchange purchased from the bank must be used exclusively for trade-backed transactions, with a reporting requirement within 72 hours.
In the following week, the CBN conducted another sale, providing $106.5 million to 29 authorized dealer banks at rates ranging from N1,498/$1 to N1,530/$1, while also buying $9.5 million from four dealers at rates between N1,510/$1 and N1,550/$1.
The CBN attributed recent fluctuations in the forex market to corporate demand pressure and the seasonal summer uptick, initiating regular sales through Authorized Dealer Banks and licensed Bureaux De Change (BDCs) to stabilize the market.
In a third sale, the CBN sold $148 million to 29 authorized dealers at exchange rates between N1,470/$1 and N1,510/$1.
Additionally, the CBN approved the sale of $20,000 to each eligible BDC at a rate of N1,450/$1 on July 18, 2024, representing the lower band of the previous trading day’s rate at the NAFEM.
