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CBN Sells Over $300m To Banks As Naira Gains

The Central Bank of Nigeria (CBN) has over $300m to Deposit Money Banks in the last two weeks amid desperate efforts to stabilise the naira-dollar exchange rate.

The Association of Corporate Treasurers of Nigeria made the disclosure in an advisory memo made available to its members, a copy of which was obtained by Findwhosabi .

Central Bank of Nigeria building

The memo read in part, “We know you must have been following up on activities in the foreign exchange market, with rates at the official market going as high as N1850/$.

“If you are not aware, be informed that the CBN last week sold over $200m to the banks below N1,500/dollar.  Similarly, this week, the CBN has on two consecutive days sold FX to banks at rates we understand to be in the $1,450 range. We hope this information helps guide your decisions regarding the rates and spreads you get from your banks.”

Confirming the development to Our correspondent, an executive committee member of the ACTN, who pleaded anonymity, said the memo was sent to ACTN members to help guide in decision-making amid the dramatic fall in the value of the naira notes.

He said, “Everything in the memo is correct. The information is from the CBN. We just wanted to keep our members informed on what is happening.”

The dollar sales came on the heels of rapid depreciation of the naira in recent weeks. As of January 1, 2024, the naira began the year at N891/$, but has since taken multiple beatings at the official Nigeria Autonomous Foreign Exchange Market and parallel markets.

However, the local currency appreciated against the United States dollar at the parallel market  last Thursday and Friday after the CBN in collaboration with the Economic and Financial Crimes Commission raided currency traders on the streets of Abuja. The currency traders were believed to be speculating against the local currency.  The local currency also firmed up at the official market.

Meanwhile, the naira appreciated against the dollar to 1,582/$ at the close of trading activities at the official market on Monday.

According to data obtained from FMDQ securities, the increase was N12 or 0.75 per cent from N1,594 recorded at NAFEM on Friday.

At the black market, the naira slipped slightly to between N1,555/dollar and N1,560/dollar, following market sentiment.

The local currency, which peaked at a lowest of 1,900/dollar on Thursday rebounded to 1,500/dollar on Friday, following EFCC raids on currency speculators.

However, the local currency depreciated slightly against the dollar at N1,555/$ on Monday evening,  according to data collated from some street traders.

The rise in naira value was due to market sentiment as the EFCC continued to clamp down on black market operators across Abuja and Lagos.

 Last week, operatives of the Economic and Financial Crimes Commission arrested over 250 BDC operators at the popular Wuse Zone 4 market. That street was however completely deserted when our correspondent visited on Monday afternoon.

Upon enquiries, it was gathered that sales were conducted at the offices of the currency traders as stipulated by the CBN.

Earlier in February and in a pushback, the CBN initiated various moves to stem the tide of the naira.

On February 4, 2024, the CBN revised operations for International Money Transfer Operators, restricting their services to inbound transfers with mandatory naira payouts.

The move has had a profound effect on the activities of major IMTOs, including Western Union and MoneyGram, and is among several measures aimed at stabilising the foreign exchange market.

Last Wednesday, the CBN in a circular addressed to all banks, cancelled cash payments for Personal and Business Travels

To promote transparency and accountability in the forex market, the CBN directed all banks to process the allowances through electronic channels.

The CBN urged all authorised dealers and the public to adhere to the new directive promptly to facilitate a seamless transition to electronic payouts.

Last week, the Federal Government said it was working on raising $10bn to improve liquidity in the foreign exchange market.

Also, to checkmate the illicit movement of funds, the Federal Government reportedly blocked the online platforms of Binance and other crypto firms.

It was learnt the move was aimed checking the alleged manipulation of the forex market.

Other platforms like Forextime, OctaFX, Crypto, FXTM, Coinbase, were also blocked.

To clamp down on currency racketeering, the EFCC has been some illegal Bureau de Change operators in different parts of the country, following the reports of engaging in currency speculation.

Last Wednesday, operatives of the Enugu Zonal Command EFCC alongside other security agencies, said it arrested 115 suspected currency racketeers in the state.

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