The Central Bank of Nigeria has disbursed $148 million to 29 authorized dealers as part of measures to stabilize the foreign exchange market following the recent fall of the naira.
A statement published on the Central Bank’s website on Friday said the sale to dealers took place on Monday, 22nd, and Tuesday, 23rd July 2024 at exchange rates of 1,470.00/$1 and 1,510.00/$1.
According to the CBN, the authorized dealers include banks and BDC operators. This development comes two weeks after the CBN sold $122.67 million to 46 authorized dealers to increase liquidity and reduce volatility in the stability of the domestic market.
A week earlier, it was also announced that $20,000 would be sold to each BDC at the rate of 1,450/US$. Despite the move, the naira weakened against the US dollar and was trading above 1,600 naira in the official market on Thursday.
The statement said, “The Central Bank of Nigeria sold a cumulative sum of US S148,000,000.00 in the Nigerian Foreign Exchange Market to Authorised Dealers on July 22 and 23, 2024.
“The sale of foreign exchange was to 29 Authorized Dealer banks at an exchange rate of 1470.00/US$1-1510.00/US$1.”
Furthermore, the CBN purchased US$2,000,000.00 (2 million US Dollars) from authorized dealer banks at a rate of 1,505.00/US$.
“The value dates for all the transactions held on July 22, 2024, was T+0, while that of July 23, 2024, was T+0,” it concluded.
Financial analysts, in interviews with Reporters, expressed concern over the recent trend of sudden increase in foreign mobility at the Nigerian Stock Exchange, which saw investments worth N311.41 billion withdrawn in the first half of this year.
This has raised concerns over the devaluation of the naira and its possible impact on the Nigerian economy.
According to NGX’s report titled ‘Domestic & Foreign Portfolio Investment’, portfolio investments worth 311.41 billion naira were liquidated in the first half of this year, compared to 73.06 billion naira in foreign capital outflows in the same period of 2023.
Financial analyst Olaide Burnu highlighted the sudden rise in foreign capital inflows to 229.07 billion naira in the first half of this year, compared to 72.02 billion naira in the same period last year.
He explained that this initially indicates increased interest from overseas investors, indicating growing market confidence.
He explained, “While the increased inflows are encouraging, the high liquidation indicates that foreign investors are cashing out their profits, which could destabilize the market.”
