CBN injects $150m to boost Nigerian FX market liquidity

The Central Bank of Nigeria (CBN) has injected a total of $150 million to boost liquidity in the forex market as the US dollar shortage lingers at the official window.

The naira has been declining for eight consecutive trading sessions, though the marginal daily depreciation has started to become significant to the exchange rate value. At the beginning of the week, the Apex Bank sold $100 million to authorised dealer banks at below the official rate to redirect the exchange rate. This failed as the naira maintained its downward streak, albeit slowly.

This, however, raised questions over the true value of the local currency, though the exchange rate has successfully decoupled from oil price movement. But the official rate is significantly dependent on the CBN FX intervention now, according to a slew of analysts.

On Wednesday, the CBN launched another FX intervention where it sold $50 million to reduce naira stress at the official window. Again, the naira posted another loss, with the intraday exchange rate touching N1,459 per dollar on Thursday.

The market is also expecting the authority to come forth for the naira on Friday, the usual pattern seen over the recent past weeks. In December, the naira exchange rate has weakened by N10 on each dollar transaction.
The case is worst in the parallel market; the FX spot rate is close to N1500 per dollar amidst shrinking numbers of licences for Bureau de change operators.