CBN defends naira with $5.78bn in 6 months as exchange rates hit N1,045 per dollar

The Central Bank of Nigeria (CBN) defended the local currency via its intervention in the Forex market with a net sale of $5.78 billion in the first half of 2023.

Conversely, CBN bought a total of $655.53 million in the market, according to the bank’s half-year financial market report released on its website on Tuesday, October 10, 2023.

CBN's interventions declined by 27%

When compared with the year before, the apex bank’s net Forex sales declined by 26.84% from $7.90 billion at the end of June 2022.

CBN sustained its intervention in the Forex market to reduce demand pressures and ensure FX stability.

Leadership reports that transactions were lower in the first six months of 2023 than in 2022, while transactions in the forward market grew slightly higher.

The CBN report says it sold $6.44 billion at the Forex market, comprising spot and forward sales of $1.56 billion or 24.19% and $4.88 billion or 75.81%, respectively.

The bank says spot sales comprised about $612.41 million or 9.51% of total Forex sold at the inter-bank Secondary Market Intervention Sales window, $455.31 million or 7,07% for Small and Medium Enterprises (SMEs) window, and $455.31 million or 6.86% for invisible and $480 million or 0,75% at the I&E window.

The naira falls to its lowest in history

Despite CBN’s interventions, the naira plummeted to its lowest in history at the parallel market on Wednesday, October 11, 2023.

The local currency exchanged for N1,040 and depreciated further to N1,045 at the black market at the close of business.

At the Investors and Exporters (I&E) window, the naira also depreciated at N776.80 from the N765.80 recorded on Tuesday, October 10, 2023.

Financial experts predict a complete rout of the naira by December if the Nigerian government continues its naira float.