Naira Posts Massive Loss in Official, Parallel Markets After CBN Sells Dollars to Authorized Dealers

• The naira crashed again in the official and parallel markets shortly after the CBN sold dollars to authorized dealers
• The naira crashed to N1,609 in the official market as against the N1,606 it traded the previous day
• The naira also crashed in the parallel end of the foreign exchange market, trading at N1,510 per dollar

Central Bank of Nigeria (CBN) intervened again in the foreign exchange markets by selling foreign exchange to 29 authorized dealers, mainly banks.

The apex bank disbursed $148 million to authorized dealers to stabilize the forex market amid the naira crash.

The naira crashes after CBN dollar sales

The bank stated on Friday, July 26, 2024, that it sold the FX to dealers on Monday, July 22, and Tuesday, 23, 2024, between an exchange rate of N1,470 and N1,510 per dollar.

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CBN said the authorized dealers included banks and Bureau de Change (BDC) operators.

Shortly after the bank announced the sales, the value of the naira dropped by 0.77% to N1,509 in the official market, compared to the previous day’s N1,606 per dollar.

FX turnover tumbles

Data from the FMDQ Exchange shows that dealers quoted the spot rate at a high of N1,615 to a dollar and a low of N1,475.

Foreign exchange turnover declined to $168.63 million in the official exchange rate market.

On Friday, July 26, 2024, the naira also crashed in the parallel segment of the Forex market to N1,610 per dollar.

CBN reports an increase in FX reserves

The development comes as the Central Bank of Nigeria reported a surge in Nigeria’s Forex reserves to $37.05 billion. 

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Nigeria’s foreign reserves increased to a 17-month high of $37.05 billion in July 2024, which experts believe will enhance investor confidence.

The CBN said the last time the country’s external reserves rose above $37 billion was in February 2023.

Rise FX reserve to boost investors’ confidence

The governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, said the amount increased from $34.19 billion in June.

The CBN disclosed this after the two-day Monetary Policy Committee (MPC) meeting in Abuja on Tuesday, July 23, 2024.

Cardoso stated that Diaspora remittances surged to $2.34 billion in 2024, compared to $1.8 billion in 2023, and that inflows increased to $38.88 billion from $37.93 billion in May 2024.

Expert predicts new exchange rate

Legit.ng earlier reported that Bismark Rewane, the managing director of Financial Derivatives Company Limited, has said that the Nigerian currency, the naira, will rally from N1,700 to N1,500 per dollar.

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Importers to pay more as CBN hikes Customs exchange rates, naira Falls to new low

CBN’s Monetary Policy Committee (MPC) raised the Monetary Policy Rate (MPR) to 26.75% from 26.25% in May 2024 to control surging inflation and promote a favourable environment for foreign investment.

Data from the FMDQ Exchange shows that the naira closed at N1,586.71 per dollar on Wednesday, July 24, 2024, compared to the N1,584.76 it traded the day before.

Source: Legit.ng