The Central Bank of Nigeria (CBN) reportedly intervened in the foreign exchange (FX) markets with $300 million in the five trading days last week as the naira exchange rate depreciated due to FX liquidity shortage in the official window, brought forward from the previous week.
According to Market Forces Africa, for most part of the week local currency’s exchange rate slided against the USD, but marginally rebounded as inflows into the market improved.
Data from the FX market showed that on Friday, the naira appreciated against the USD, in last-minute transactions based on FX supply by the apex bank. During the day, the naira appreciated by about 2% in exchange with the USD to settle at N1,517.93/$1 in the official market after persistent negative volatility of the preceding days.
Spot FX data from the regulator showed that the naira gained N29.89 last Friday following FX sales to banks as well as additional inflows from foreign remittances, which reduced demand for FX payments.
In its investors note during the week, AIICO Capital Limited stated that FX interventions and inflows from offshore clients and local entities boosted the USD volume in the official window amid demand pressure persisted.
The CBN had sold $188.10 million to deposit money banks during the last auction with the FX rate ranging between N1,532.00/$1 to N1,540.00/$1.
A leading banking firm, TrustBanc Financial Group Limited, disclosed that the last auction on Friday brought the total FX sales for the week to $360.00 million.
Despite the apex bank’s interventions, demand was still higher than supply, causing the naira to depreciate. However, reports showed that the end of the week, liquidity in the FX market improved, with the naira trading between N1,480/$1 and N1,548/$1.
Meanwhile, data from the CBN showed that Nigeria’s external reserves rose by USD12.06 million to USD38.36 billion after nine consecutive weeks of depreciation.
Also, in the forwards market, the naira rates depreciated by 0.6% for a one-month contract to N1, 577.80/$1
