With its limited involvement in the foreign exchange market, the Central Bank of Nigeria (CBN) has come under fire for suggesting that it is not using its foreign reserves to support the naira appreciation.
Just $581 million has been sold by the CBN in the official market, NAFEM, this year, making up just 3.2% of the $17.938 billion total market turnover.
This disproves the idea that the bank has been depleting its reserves in order to support the naira.
Since starting dollar sales again two months ago, the CBN has also sold about $60 million to Bank of Central Banks (BDCs).
In April, Nigeria lost $2.16 billion in foreign reserves in a single month, bringing them to a seven-year low. The CBN’s foreign exchange reserves as of April 15, 2024, were $32.29 billion, down from $34.45 billion on March 18, 2024.
Rather than the naira appreciation being defended, the decrease is ascribed to debt repayments, as Nigeria has substantial foreign debt servicing commitments, such as Eurobond payments and other international financial obligations.
