The Central Bank of Nigeria (CBN) has injected much-needed fans to the currency markets yesterday in a bid to stabilize the Naira.
The auction had been earlier suspended by the CBN due to the COVID 19 pandemic amid dwindling of the foreign exchange reserves to around $34 billion. Not surprising the price of dollar rose due to the lack of Forex available despite the lockdown.
As at the time of publication $1 is valued at around NGN440 as against the 366 naira pre-pandemic. The Apex bank, however, surprised many yesterday by injecting between $90-$100 million to the system via the Wholesale Secondary Market Interventions.
This was in contrasts to the usual monthly Auction that the bank sells which is short-tenured forwad. In addition CBN allocated a Spot price at USD/NGN386 with the Shareholders funds getting the largest chunk of the allocation.
Central Bank will continue to intervene amid rising USD prices
Furthermore, the Central Bank reiterated its commitment to continue boosting interbank Forex market to ensure stability and availability for customer’s demands. The Apex bank has regularly intervened in the increasingly volatile market as an active buyer and seller.
Nigeria is an import dependent country and this makes it important that the USD is kept stable as fluctuations generally impact the cost of goods and services in the country.
The Covid-19 crisis has also made things tougher for Africa most populous country which has seen its earnings in Forex reduce due to low demand for crude oil across the world.
The financial markets will see this injection by the Apex bank as a good sign of things to come as the nation gradually looks to reopen its economy in the coming weeks.