Nigeria’s central bank is attempting to stabilize the country’s currency, the naira, by injecting US dollars into the foreign exchange market.
On Tuesday, they sold $15.83 million to exchange bureaus at a more favorable rate (1,021 naira per dollar) compared to the official market rate (1,315 naira per dollar).
This marks the fourth such intervention this year and the second in April alone.
The central bank aims to address the shortage of foreign currency and meet the demands of legitimate users.
They distributed $10,000 each to 1,583 currency exchange operators with the instruction to resell the dollars with a maximum markup of 1.5%.
This strategy aims to increase liquidity in the market while maintaining some control over the exchange rate.
The naira had previously reached record lows in February, but has shown signs of strengthening recently.
This coincides with the central bank’s recent actions, including raising interest rates and allowing increased foreign participation in bond auctions.
These measures aim to attract foreign investors and bolster the naira’s value.
However, Governor Olayemi Cardoso of the central bank has clarified that their goal isn’t to artificially prop up the currency.
He added that the recent decline in foreign reserves (around $2 billion in the past two months) wasn’t a result of defending the naira.
