CBN sold $543.5 million FX to Nigerian banks in September to stem volatility 

According to a statement from Omolara Duke, Director of the Financial Markets Department at the CBN, the sales occurred over 11 dealing days through a two-way quote at the Nigeria Foreign Exchange Market (NFEM).

She explained that the spot sales aimed to mitigate market volatility driven by high demand for commodity imports and seasonal foreign exchange needs.

The statement noted that its purpose was to educate and provide guidance to the general public on the pricing of foreign exchange by referencing the range of rates at which it was sold by the CBN to authorized dealers.

It further stated that the CBN would continue to facilitate the supply of foreign exchange into the Nigerian Foreign Exchange Market (NFEM) as part of its holistic foreign exchange management strategy.

The statement, “The Central Bank of Nigeria (CBN) sold a total of US$543.5 million (Five Hundred and Forty-Three Million, Five Hundred Thousand US Dollars Only) from September 06-30, 2024, to Authorized Dealer banks through two-way quotes at the Nigerian Foreign Exchange Market (NFEM) on 11 dealing days.” 

“The FX spot sales were to reduce observed market volatility driven by high demand for commodity importation and seasonal demand for FX. The value dates for all the transactions were T+2.” 

The sale of FX to bank dealers had positive effects on the Niara’s performance in the official market. The Naira closed at N1,541 in September 2024 on the official NAFEM window, showing a slight improvement compared to its performance in July and August 2024. However, in the parallel market, the Naira fell to its lowest point in seven months, closing at N1,700/$—its weakest level since February 2024.

According to Nairalytics data, September marked the Naira’s strongest performance since June 2024, when it closed at N1,505/$ on the official window. In July, the Naira ended at N1,608/$ on the official market and N1,600/$ in the parallel market. A similar trend followed in August, with the Naira closing at N1,598/$ on the official market and N1,616/$ on the parallel market.

Earlier, Niarametrics reported the Central Bank of Nigeria (CBN) plan to introduce an electronic matching system for foreign exchange transactions in the Nigerian FX market, set to commence on December 1, 2024.

The apex bank stated that it will publish real-time prices and work in collaboration with the FMDA to establish rules for the operation of EFEMS.