The Central Bank of Nigeria (CBN) is spending a net sum of roughly $1 billion a month to defend the Naira even as pressure continues to build on the domestic currency.
Nigeria’s foreign currency reserves are down some $2 billion since April 20th to $33.8 billion, on June 21st, according to CBN data.
Higher oil prices have failed to give a lift to the CBN reserves as the double whammy of increased cost of imported petroleum products and generally higher import volumes as the economy recovers, means the CBN will continue to walk a tight rope.
The Naira was trading firmer at N411.50 per dollar at the Investors and Exporters (I&E) window of the market yesterday, with average daily traded value of $192.75 million.
Liquidity has been increasing steadily in the I&E foreign exchange window as average turnover rose by 113 percent between April and May 2021 to $2.52 billion.
Analysts tell MoneyCentral that the CBN needs to encourage wider sources of foreign exchange inflows such as exports, remittances and portfolio investments.
The S&P FMDQ, Nigeria Sovereign Bond Index is down -21.17 percent year to date reflecting repricing of yields as the CBN seeks to attract more carry traders to Naira debt amid soaring inflation.
The Naira was trading at N495 per dollar at the parallel or black market, according to MoneyCentral surveys.