The CBN has once again intervened in the foreign exchange market to bolster the naira. Although foreign exchange interventions have decreased, increased transparency through automated currency trading platforms has led to greater participation by foreign portfolio investors in the financial markets.
Exchange prices at the Nigerian autonomous foreign exchange window have varied, despite the naira’s gains on the BMatch electronic FX trading platform. Even if the official spot rate declined due to fresh demand pressure, the two spot rates are still approaching convergence.
On Wednesday, the naira depreciated to close at ₦1,545 per dollar, according to FMDQ platform data. This occurred despite the CBN selling $28.5 million to authorized deposit money banks at rates ranging from ₦1,500 to ₦1,549 per dollar. Analysts expect the exchange rate to stabilize, supported by enhanced transparency and the CBN’s interventions.
One analyst at Broadstreet explained the volatility by saying that it is a natural part of efficient foreign exchange markets. According to the expert, “demand and supply dynamics naturally cause the rates to fluctuate; forex trading isn’t robotic.”
