CBN Injects Fresh Liquidity to Stabilise Naira Amid Plunging Exchange Rates
The Central Bank of Nigeria (CBN) has announced plans to inject additional foreign exchange liquidity into the market by selling $20,000 to each eligible Bureau De Change (BDC) operator across the country. This move comes in response to the continuing depreciation of the naira, which recently dropped to N1,658.48 per dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM).
The intervention was confirmed in a statement released on Wednesday by Dr. W. J. Kanya, Acting Director of the Trade and Exchange Department at the CBN. The bank indicated that the sale was intended to meet demand for “eligible invisible transactions” such as travel allowances, medical bills, and tuition fees.
The CBN’s action comes after a sharp decline in the value of the naira, which hit N1,670 per dollar in the parallel market. BDC operators had been selling at similar rates, underscoring the widening gap between official and black-market exchange rates.
“This is to inform Bureau De Change operators and the general public that the CBN will be providing additional liquidity to this segment of the foreign exchange market,” the statement read. “To this end, the CBN has approved the sale of $20,000 to each eligible BDC at the rate of N1,590/$, to meet the demand for invisible transactions.”
The central bank also issued a strict warning to operators, stipulating that they are not permitted to sell dollars at more than one percent above the purchase rate. This effectively caps the profit margin on each dollar at N15.59, in a bid to curb speculation and further stabilise the market.
“All BDCs are allowed to sell to eligible end-users at a margin of NOT MORE THAN one percent above the purchase rate from CBN,” the statement added. Operators interested in participating are required to make naira payments to designated CBN accounts and complete the necessary documentation at CBN branches in Abuja, Awka, Kano, and Lagos.
The central bank’s decision to sell foreign exchange directly to BDCs marks its seventh attempt to stabilise the naira after a lengthy suspension of such sales in 2021. Earlier this year, the CBN revoked the licences of over 4,173 BDC operators for violating regulatory guidelines, leaving only 1,583 authorisedoperators. This latest injection could see up to $31.66 million flow into the retail end of the market, offering a temporary boost to liquidity.
Despite the CBN’s efforts, the naira continued to weaken on Wednesday, dropping a further N9 to N1,667.42 per dollar in the NAFEM, a 0.53 percent decline from the previous day’s rate of N1,658.
This intervention by the CBN is part of a broader strategy to address the growing disparity between official and parallel exchange rates, as well as the chronic dollar shortages that have plagued Nigeria’s economy in recent months. Whether this latest measure will stabilise the naira in the longer term remains to be seen, as the market continues to react to inflationary pressures and external economic forces.
