$876 million was recently invested by the Central Bank of Nigeria (CBN) in various foreign currency (forex) market segments.
The apex bank’s pledge to maintain the appropriate operation of the forex market by augmenting liquidity when required is reaffirmed by the currency injection.
The top bank made a $876 million offer to satisfy bids from clients in an auction that was held yesterday.
Using the Retail Dutch Auction System (RDAS), the CBN’s leadership has added a further mechanism to enable direct forex sales to end users, keeping with its commitment to give all eligible customers transparent access to foreign exchange.
The strategy seeks to promote price discovery, lessen information asymmetry, and increase market transparency.
It is an addition to the two-way quote system that has been used in recent months to improve interbank market liquidity, allowing for the sale of over $305 million in foreign exchange to approved dealers in the last three weeks.
Yesterday, the CBN announced that its policy goals are supporting market confidence and producing noticeable benefits.
Between January and June, net foreign exchange flows increased by 55% year over year to $25.4 billion. Record inflows of diaspora remittances through official channels and an increase in capital importation—which hit $6 billion in June 2024—have propelled this expansion.
“The foreign exchange market is also showing signs of improvement and increased depth, with more robust and diversified sources of liquidity contributing to the sustained convergence of exchange rates across all segments of the market. The official market recorded a turnover of $43 billion in customer transactions by the end of July 2024, with CBN-supplied liquidity representing less than five per cent of total market activities,”CBN stated.
The CBN pledged that it will not waver in its support of an open, competitive foreign exchange market and that it will work to make the market more capable of serving the interests of all bona fide players.
