The Central Bank of Nigeria (CBN) is holding a retail dollar auction today in an effort to stabilize the naira, which has been rapidly declining despite previous interventions.
The naira fell below N1,600 per US dollar last month and closed at N1601 on Tuesday, marking a 70% drop over the past year.
The CBN sold $369 million in July but bought less than $20 million from banks, with its previous efforts failing to relieve the naira’s pressure.
The new retail auction aims to meet high foreign exchange demand and stabilize the currency by increasing dollar supply directly to customers.
Ayokunle Olubunmi from Agusto Consulting explains that the auction revives a system meant to support the naira and reduce the forex window’s burden.
The CBN’s intervention is also intended to manage the seasonal demand for dollars from tourists and importers.
(Business Day)