December 12, 2024
By Idris Buba
In an attempt to shore up the naira against the US dollar, the Central Bank of Nigeria CBN had made another move in the official foreign exchange market to keep the naira strong.
A report by MarketForces Africa, on Wednesday, indicated that the naira lost to close at N1,545 as per spot data from the FMDQ platform despite the fact that the Central Bank of Nigeria (CBN) sold US dollar to boost forex liquidity in the market.
The CBN intervened, selling $28.5 million to authorized deposit money banks between the rate of N1,500 and N1,549 per greenback.
The exchange rate is projected to claw back losses due to improved transparency and with support by the Central Bank.
READ MORE; Traders Blame Speculators As Naira Plummets to N1,745/$1,
FX intervention has reduced drastically as foreign portfolio investors (FPIs) participation in the financial markets increased due to improved transparency brought about by automated currency trading platform.
While the naira has seen gains on BMatch electronic FX trading platform, the exchange rate at the Nigerian autonomous foreign exchange window has been fluctuating. But the two spot rates closed to convergence areas, with the official spot rate losing strength due to renewed demand pressures.
According to a Broadstreet analyst naira fluctuation is what makes FX market efficient, noting that forex trading is not robotic in nature, the analyst explained that sometimes demand will rise faster than aggregate supply, and it will change the determining factor.
