Recent data from FMDQ Securities Exchange reveals that the Central Bank of Nigeria (CBN) has conducted rare interventions in the foreign exchange (FX) market, sparking doubts about its efforts to defend the naira using its foreign reserves. The CBN’s sales of $581 million in the official market, representing only 3.2% of the total market turnover of $17.938 billion this year, signify minimal involvement in FX transactions.
Contrary to claims suggesting the CBN’s active defense of the naira by depleting reserves, the data portrays a different picture. Even with the recent naira appreciation, which is not attributed to CBN interventions, the bank’s dollar sales to Bureau de Change (BDCs) amounting to around $60 million over the past two months do not significantly impact the market dynamics.
The decline in Nigeria’s foreign reserves to $32.29 billion as of April 15, 2024, from $34.45 billion in March, is primarily attributed to debt repayments rather than naira defense efforts, according to CBN Governor Olayemi Cardoso. With substantial external debt service requirements, including payments on Eurobonds and other international obligations, the country’s reserves face continuous strain.
Source: Business Day