The Central Bank of Nigeria (CBN) is devising strategies to halt the ongoing depreciation of the naira against the dollar. One key approach involves injecting an influx of dollar cash into the market.
As of August 14, the naira concluded trading at N744.41/$ within the Investors & Exporters (I&E) window and N935/$ in the parallel market.
Since adopting a unified exchange rate structure in June, which merged all rates into the I&E window, the naira has seen its value diminish by more than 40 percent.
A representative from the CBN board, as reported by THE Nation, shared that the bank is poised to infuse foreign exchange into the market to stabilize the fluctuating exchange rate. This move aims to utilize reserves for naira stabilization.
Describing this decision as part of a routine managerial function, the board member emphasized its beneficial impact on supporting the naira’s current state.
To counter the naira’s downward spiral, the board member advocates for a proactive approach of flooding the market with foreign exchange. Despite the government’s inclination toward a free market, demand management policies become necessary in this context.
The board member stated;
“The demand is overwhelming and you need to manage that demand, restrict that demand with certain policies. Foreign exchange availability is very limited, so the problem requires to be tackled from both the demand and supply sides.”