How CBN’s sale of $2.03bn crashed the Dollar in 5 Weeks

Over the past five weeks, the Central Bank of Nigeria (CBN) through its regular interventions at the foreign exchange market sold over $2 billion dollars to meet wholesale and invisible demand, causing the value of the naira to soar at the parallel market.

Presently, the value of the naira at the black market and the Bureau de Change (BDC) rate have converged and is nearing the rate at which banks sell to their customers.

The value of the naira as at Friday afternoon had appreciated to N380 to the dollar, while the BDC and bank-selling rates stand at N375 and N385 to the dollar respectively.

In February, the CBN commenced intense flooding of the forex market with dollars after the naira dropped in value to around N550 to the greenback.

In all, it had sold $410 million for invisibles such as school fees, medical fees, Basic Travel Allowance and Personal Travel Allowance between February 21 and March 24, 2017.

Also, the apex bank had sold $1.623 billion to banks in wholesale forward contracts during the five-week period.

Leadership, March 26, 2017

 

 

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