Naira Stabilizes at ₦1,596/$ Amidst Surge in Forex Inflows to $25 Billion
The central bank of Nigeria (CBN) has reported that net foreign exchange inflows into the country surged to $25.4 billion in the first half of 2024, reflecting a 55% increase compared to the same period in the previous year. This increase is attributed to the CBN’s policy measures, which have led to a rise in capital importation and record inflows from diaspora remittances. Despite these improvements, the naira closed at N1,596 per U.S. dollar on Thursday, maintaining the same rate as the previous day.
In a bid to address unmet foreign exchange demands, the CBN conducted an $876 million auction to 26 banks, employing the Retail Dutch Auction System.
This system aims to promote transparency, reduce information asymmetry, and aid in price discovery within the foreign exchange market. Over the past three weeks, the CBN has sold more than $305 million to authorized dealers to enhance liquidity in the interbank market.
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The CBN’s statement highlighted that the foreign exchange market is showing signs of improvement, with increased depth and more diversified sources of liquidity contributing to the convergence of exchange rates across all market segments. As of July 2024, the official market recorded a turnover of $43 billion in customer transactions, with CBN-supplied liquidity accounting for less than 5% of total market activities.
However, despite these positive developments, the CBN’s interventions have not yet translated into improved living conditions for the average Nigerian, as inflation and the high cost of living remain significant challenges.
Experts, including Charles Sanni, CEO of Cowry Treasurers Limited, and Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, have praised the CBN’s efforts to stabilize the naira and reduce market volatility. They emphasize that these interventions are crucial for maintaining investor confidence and ensuring economic stability.
The naira’s trading range on Thursday saw an intra-day high of N1,616 and a low of N1,520 per U.S. dollar, with dollar supply between willing sellers and buyers increasing to $141.99 million from $93.92 million on Wednesday.
