The Central Bank of Nigeria (CBN) has sold $48 million to authorized dealer banks as part of its foreign exchange (FX) intervention, aimed at stabilizing the naira. This move comes as the CBN prepares to launch an automated FX trading platform.
The dollar auction is expected to enhance FX liquidity in the official currency market and curb the naira’s recent decline. The CBN’s FX interventions have been gradually decreasing since it announced plans to automate trading of NGN/USD pairs on the Bloomberg platform.
Reduced FX liquidity has weakened the naira against the U.S. dollar in various forex markets. According to Bizwatch Nigeria, the CBN reduced its FX interventions by 30% last month despite an increase in the country’s foreign reserves.
Meanwhile, the Nigerian government has secured approval for $2.2 billion in external loans. On Wednesday, the CBN intervened in the FX market with the $48 million sale, according to TrustBanc Financial Group’s market update.
Nigeria’s external reserves currently stand at $40.26 billion, while oil prices have dropped to the $72–$75 per barrel range. Analysts expect the introduction of the Bloomberg BMatch System for FX trading to improve transparency and boost investor confidence in the market.
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