In a remarkable turn of events, Nigeria's economy has witnessed a sudden surge with a staggering $1.5 billion influx within just a week. The Central Bank of Nigeria (CBN) has taken center stage in orchestrating this financial boost, strategically injecting funds to stabilize the country's foreign exchange market. As the naira gains strength, trading at N1,309/$1, following the CBN's interventions, there's a palpable sense of optimism about the nation's economic trajectory.
- The Central Bank of Nigeria’s strategic efforts resulted in a $1.5 billion influx to Nigeria's economy.
- The Naira strengthens, trading at N1,309/$1 following CBN interventions.
- CBN clears forex backlogs, signals increased liquidity in the market.
The apex bank’s Acting Director of the Corporate Communications Department, Mrs Sidi Ali, made the disclosure via a statement, as seen in the Nigerian newspaper, The Punch.
She relayed that this inflow is a result of the bank’s methodical plan to stabilize the foreign exchange market. According to the Acting Director, the country's currency, the naira has continued to strengthen in the Autonomous Foreign Exchange market, trading at N1,309/$1 on Friday, up from N1,611/$1 in the second week of March 2024.
On Monday the CBN indicated that the naira may continue on its positive trend as currency traders were sold US dollars by the country’s central bank at a more favorable rate.
The central bank in return requested that the currency traders sell no more than 1.5% above the purchase price.
The Bureau De Change (BDC) operators had acquired the dollar for N1,251/$, from the apex bank. This is in line with the bank’s promise back in February to sell $20,000 weekly to BDCs for no more than N1,301.
At his post-meeting conference, the bank's governor Mr. Olayemi Cardoso maintained that the central bank had cleared all confirmed foreign exchange backlogs, implying that liquidity in the foreign exchange market will increase.
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Additionally, in March, the Central Bank, hiked the country’s interest rate from 22.75% to 24.75%, with private-sector operators noting that the hike could accelerate the country’s inflation and lead to massive job cuts.
“While the increase in interest rate may have tendencies toward strangulating the economy, with the foreign exchange rate coming down, that also helps to moderate it overall,” the governor said.
“And as I said earlier, you would expect that this would not be too long drawn; at least I would hope so. We are getting towards a situation where the exchange rate is moderating, and we are expecting it to moderate and then it finds a level that, quite frankly, is sustainable. This would involve huge collaboration with the fiscal side because a lot of that cannot just rely on the monetary side alone,” he added.
