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Economy

CBN, banks sell $9.9bn as naira collapses to N1,670/$

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By Mario Deepromoter

The value of foreign exchange turnover via the Nigerian Autonomous Foreign Exchange Market increased to N15.74tn ($9.90bn) in August 2024, an FMDQ report has stated.

This came as the Central Bank of Nigeria revealed that foreign inflow into the country increased to $585m in the same month.

Also, at the official market on Tuesday, the value of the naira dropped to N1,658 against the United States dollar from the N1,659 it sold on Monday while black market sellers sold at the rate of N1,670.

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The CBN said the impressive turnover via the Nigerian Autonomous Foreign Exchange Market represents a significant month-on-month increase of 33.88 per cent, equating to an additional N2.51tn from July 2024’s turnover of N13.23tn ($7.39bn). value of foreign exchange turnover via the Nigerian Autonomous Foreign Exchange Market increased to N15.74tn ($9.90bn) in August 2024, an FMDQ report has stated.

This came as the Central Bank of Nigeria revealed that foreign inflow into the country increased to $585m in the same month.

Also, at the official market on Tuesday, the value of the naira dropped by N1 to N1658 against the United States dollar from the N1,659 it sold on Monday while black market sellers sold at the rate of N1,700.

The CBN said the impressive turnover via the Nigerian Autonomous Foreign Exchange Market represents a significant month-on-month increase of 33.88 per cent, equating to an additional N2.51tn from July 2024’s turnover of N13.23tn ($7.39bn).

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This surge reflects heightened trading activity and investor engagement in the foreign exchange market.

Commercial banks, CBN, and international oil firms are the major sellers of forex at NAFEM.

According to the financial markets monthly report for August published by the FMDQ and obtained by our correspondent on Tuesday, the increase in turnover was driven by the increase in T.bills, OMO Bills, and FGN Bonds transactions, while transactions in other bonds recorded a MoM decrease of 18.43per cent (N10bn).

Despite this increase, the naira experienced continued depreciation, contributing to increased exchange rate volatility.

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The report read, “Spot FX market turnover was $9.90bn (N15.74tn) in August 2024, representing a 33.88 per cent ($2.51bn) MoM increase from the turnover recorded in July 2024 ($7.39bn).”

It also stated that total secondary market turnover on FMDQ Exchange was N40.43tn, which represents a MoM increase of 31.97 per cent (N9.79) and a YoY increase of 128.57 per cent ( 22.74tn) from July 2024 and August 2023 figures, respectively.”

The FMDQ added that foreign Exchange and Money Market transactions dominated secondary market activity, jointly accounting for 69.98 per cent of the total secondary market turnover in August 2024.

In August, the naira traded within a range of 1,543.84 to N1,617.08, indicating heightened fluctuations compared to the previous month’s range of 1,500.32 to N1,621.12.

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It said the average spot exchange rate rose by 1.68 per cent (N26.24) to close at N1,586.56, compared to N1,560.32 in July.

“In the FX Market, the Naira depreciated against the US Dollar, with the spot exchange rate increasing by 1.68 per cent ($/N26.24) to close at an average of $/ N1,586.56 in August 2024 from $/N1,560.32 recorded in July 2024.

“Further, exchange rate volatility increased in August 2024 as the Naira traded within an exchange rate range of $/N1,543.84 – $/N1,617.08 compared to $/N1,500.32 – $/N1,621.12 recorded in July 2024.”

This increased volatility underscores the challenges facing the Naira amidst ongoing economic pressures, including inflation and shifts in global market dynamics.

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Last month, the Central Bank of Nigeria auctioned $876.26m to end users through 26 commercial banks in its latest effort to strengthen the ailing Naira.

This policy led to a temporary appreciation of the Naira against the US Dollar, with the exchange rate adjusting to N1,596.52/$ from N1,601/$.

The auction sold about $876.26m, aimed at alleviating rising demand pressures in the forex market and promoting price discovery.

The sales report highlighted that businesses in the manufacturing sector benefited significantly from the auction, securing dollars for importing spare parts, industrial raw materials, plain paper, pharmaceutical products, and equipment for breweries.

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At the official market on Tuesday, the value of the naira dropped by N1 to N1658 against the United States dollar from the N1,659 it sold on Monday while black market sellers sold at the rate of N1,700.

Meanwhile, the CBN Governor, Olayemi Cardoso, has stated that the value of naira against international currencies cannot increase if the fundamentals of forex expenses are not addressed.

Cardoso, speaking at a press briefing at the end of the 297th Monetary Policy Committee meeting, revealed that Nigeria’s external reserves have increased yet again, reaching $39.07bn as of September 19, 2024.

He said since the strategy of the apex bank is to unlock as many diversified sources as possible into the foreign exchange section, it is not enough and can never replace the fundamentals.

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He said, “The external reserve stood at US$39.07bn as at 19th September 2024 an increase of 17.4 per cent compared with US$33.28bn in the corresponding period of 2023. This represents 8 months of import cover for goods and services and 13 months of imports of goods only.”

“As of August, inflow from remittances was $585m and this is a big deal as it is 130 per cent for the corresponding period last year. These figures didn’t drop from the ceiling but our deliberate and calculated effort. We recognised that certain things were not happening. We liberalised the IMTOs and encouraged them to open accounts in naira and we are normally dealing with them regularly and this has incredibly paid off.

“But on the naira, I must tell you that since the strategy of the central bank is to unlock as many diversified sources. it is not enough and can never replace the fundamentals.”

The central bank governor further explained that as long as the country operates on a monolithic economy, achieving a strong exchange rate “that we all so desire” would continue to be hampered.

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“Non-oil exports must also increase. Having an exchange rate that we all so desire will continue to be hampered. We need to diversify our economy to boost the naira. We may like to think or dream it can, but it can’t. Until the fundamentals are fixed and in place, you will continue to sub-optimise,”

“Oil production has got to be ramped up to the level that will carry the economy. I think we are all ongoing witnesses to the efforts that are being made in that sector. It has to happen. I spoke about the sad situation that we as Nigerians face today whereby we are a monolithic economy.

“We need to diversify our economy. There is so much that a central bank can do. Without the fundamentals in the right position, we will continue to sub- optimiser,” Cardoso added.

The CBN governor said Nigerians must find ways to achieve import substitution.

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“It can not just be about import and we must be able to calibrate accordingly our taste for foreign goods,” Cardoso said.

“These are all things that will determine essentially where we settle in respect to our foreign exchange rate.”

He said the central bank is determined to play its part in ensuring that the market operates efficiently while warning that the apex bank is ready to penalise “those who play the market”.

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Economy

CBN reaffirms commitment to financial system stability

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The Central Bank of Nigeria (CBN) has reassured the public of its unwavering commitment to ensuring the stability and reliability of the Nigerian financial system.

The apex bank recognises the crucial role that confidence plays in banking operations and wants to affirm that all deposits in Nigerian banks are secure.

According to a statement signed by the acting director, Corporate Communications, Hakama Sidi Ali, the CBN actively ensures that banks adhere to established regulations and best practices to maintain the integrity of the Nigerian financial system.

“Regular stress testing is conducted to identify potential vulnerabilities, helping to ensure that our financial institutions are resilient. In addition, the CBN has implemented Early Warning Systems that proactively detect and address emerging risks, allowing us to provide timely solutions to any foreseen issues,” the statement stated.

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It however said that the bank’s approach to Risk-Based supervision ensures that it focuses its regulatory efforts on institutions that may pose the highest risk to the financial system. This targeted strategy allows it to maintain a robust oversight mechanism while promoting the overall health of the banking sector”.

The statement added that the CBN has established memoranda of understanding with the various countries where Nigerian banks’ subsidiaries are located.

This collaboration, according to the statement, enhances regulatory coordination and ensures that our banks operate within a safe and sound framework in accordance with banking regulations, both domestically and internationally.

The statement maintained that CBN remains dedicated to fostering a secure banking environment where depositors can be fully confident in the safety of their funds.

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The apex bank assured that “It will continue to monitor and adapt strategies to safeguard the financial interests of all Nigerians and stakeholders in our financial system.”

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Economy

SEE Black Market Dollar To Naira Exchange Rate Today, October 8th 2024 Can Be Accessed Below

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By Mario Deepromoter

The official naira black market exchange rate in Nigeria today including the Black Market rates, Bureau De Change (BDC), and CBN rates.

Please note that the exchange rate is subject to hourly fluctuations influenced by the supply and demand of dollars in the market. As of now, you can purchase 1 dollar at a certain rate now, however, it’s important to remember that the rate can shift (either upwards or downwards) within hours.

How much is a dollar to naira today in the black market?

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Dollar to naira exchange rate today black market (Aboki dollar rate):

The exchange rate for a dollar to naira at Lagos Parallel Market (Black Market) players buy a dollar for N1665 and sell at N1675 on Monday 7th October 2024, according to sources at Bureau De Change (BDC).

Please note that the Central Bank of Nigeria (CBN) does not recognize the parallel market (black market), as it has directed individuals who want to engage in Forex to approach their respective banks.

Dollar to Naira Black Market Rate Today
Dollar to Naira (USD to NGN) Black Market Exchange Rate Today
Buying Rate N1665
Selling Rate N1675
Dollar to Naira CBN Rate Today
Dollar to Naira (USD to NGN) CBN Rate Today
Buying Rate N1628
Selling Rate N1629
Please note that the rates you buy or sell forex may be different from what is captured in this article because prices vary.

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Economy

Why Federal Govt floated the Naira – CBN Governor, Cardoso gives reasons

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The Governor, Central Bank of Nigeria, CBN, Mr Olayemi Cardoso, has said that the apex bank under him took the bold step of floating the Naira in the foreign exchange market in order to bring the official exchange rate closer to market reality.

About three CBN Governors before Cardoso had toyed with the floatation option when they faced constant excess demand for foreign exchange and exchange rate pressures. They all abandoned the option due to fear of massive depreciation of the value and the contagion effect across the macroeconomic space.

But Cardoso, speaking for the first time on his journey on the saddle so far and focusing on the turbulence in the financial market following his assumption of office a year ago, explained that the floatation policy was meant to address the disparity between the official and parallel rates which encouraged arbitrage and speculation, eroding trust in the market.

While addressing members of the Harvard Club of Nigeria in Lagos at the weekend on the topic: “Leadership in Challenging Times: Restoring Credibility, Building Trust, and Containing Inflation”, Cardoso recalled that upon assumption of duty, he understood that the credibility of the Central Bank of Nigeria (CBN) had to be the bedrock of the actions he and his team took.

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He stated: “Without credibility, no policy, however well-intentioned, can succeed. Floating the naira, a decision met with considerable public criticism, was necessary to bring the official exchange rate closer to market reality. ‘‘The disparity between the official and parallel rates had encouraged arbitrage and speculation, eroding trust in the market.

“Credibility is earned by consistency. The decision to close this gap, while painful in the short term, sent a message to market participants that the CBN was committed to transparency and sound monetary policy,” he added, noting that speculative trading had been reduced, and stability was gradually returning to the currency markets.

While noting that containing inflation remained the Bank’s core mission, he acknowledged that the CBN was yet to meet its target.

However, he stressed that recent declines reported by the National Bureau of Statistics (NBS) in July and August 2024 showed that the CBN was moving in the right direction.

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He explained further: “Our decision to raise the Monetary Policy Rate (MPR) to 27.25% was a bold move. Higher interest rates, while painful for borrowers, are necessary to curb excess money in circulation and control inflation. Leadership is about making hard choices to secure long-term stability over short-term comfort in moments like these.’’

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