CBN Defends Naira With $5.78bn in 6 Months as Exchange Rates Hit N1,045 Per Dollar
- The Central Bank of Nigeria says it defended the naira with about $578 billion
- The move, the bank says, is to ensure adequate supply at the foreign exchange market
- Despite CBN’s interventions, the naira plummeted to its lowest in history, exchanging for N1,045 per dollar on the black market
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The Central Bank of Nigeria (CBN) defended the local currency via its intervention in the Forex market with a net sale of $5.78 billion in the first half of 2023.
Conversely, CBN bought a total of $655.53 million in the market, according to the bank’s half-year financial market report released on its website on Tuesday, October 10, 2023.
CBN's interventions declined by 27%
When compared with the year before, the apex bank’s net Forex sales declined by 26.84% from $7.90 billion at the end of June 2022.
CBN sustained its intervention in the Forex market to reduce demand pressures and ensure FX stability.
Leadership reports that transactions were lower in the first six months of 2023 than in 2022, while transactions in the forward market grew slightly higher.
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The CBN report says it sold $6.44 billion at the Forex market, comprising spot and forward sales of $1.56 billion or 24.19% and $4.88 billion or 75.81%, respectively.
The bank says spot sales comprised about $612.41 million or 9.51% of total Forex sold at the inter-bank Secondary Market Intervention Sales window, $455.31 million or 7,07% for Small and Medium Enterprises (SMEs) window, and $455.31 million or 6.86% for invisible and $480 million or 0,75% at the I&E window.
The naira falls to its lowest in history
Despite CBN’s interventions, the naira plummeted to its lowest in history at the parallel market on Wednesday, October 11, 2023.
The local currency exchanged for N1,040 and depreciated further to N1,045 at the black market at the close of business.
At the Investors and Exporters (I&E) window, the naira also depreciated at N776.80 from the N765.80 recorded on Tuesday, October 10, 2023.
Financial experts predict a complete rout of the naira by December if the Nigerian government continues its naira float.
Analysts flay CBN's naira float policy
Fredrick Ohale, a financial expert, told Legit.ng that the naira must run a full circle before rebounding as the country remains monolithic.
"What we see now is a thoughtless and impulsive policy decision by the federal government. The plan to float the naira was a lousy idea ab initio as Nigeria only exports crude oil," Ohale said.
According to him, Nigeria should have worked on increasing its non-oil exports and ensuring a suitable environment for investors.
Former deputy governor of the CBN, Tunde Lemo, said the decision to float the naira was terrible.
Lemo asked the CBN to revert to managed float of the local currency as not many countries in the world float their currencies,
CBN says currency in circulation reached N2.76trn in September as naira hits N1,010 per dollar
Legit.ng earlier reported that Data from the CBN revealed the currency in circulation hit about N2.76 trillion as of September 2023.
The new threshold represents a 14.5% decline yearly from the N3.23 trillion reported in September last year.
According to CBN, currency in circulation refers to physical cash, including paper notes and coins, used for transactions between consumers and businesses in a country.
Source: Legit.ng
