Nigeria’s foreign exchange market now has more dollar supply as a result of the central bank’s changes, allowing companies to settle past-due dollar obligations.
The central bank sold dollars to money dealers on Tuesday in order to increase distribution to retail consumers, causing dollar liquidity to soar 90% to $160.8 million.
The naira fell 1.2% against the dollar, to 1,416, nonetheless.
The largest food and beverage company in the nation, BUA Foods, reduced debt by almost 6% in the first quarter of this year by utilizing the increased dollar liquidity.
Cadbury Since the start of the year, Nigeria has been able to obtain all of its dollar supply needs from the official market, since local currency cash has decreased as a result of purchasing foreign exchange in advance for commodities needed.
Businesses are able to pay off debt and lessen the impact of devaluation because to the increased dollar liquidity.
To help the turnaround businesses want, it must be maintained throughout the upcoming year.
In order to maintain fiscal responsibility in terms of controlling government spending, authorities must guarantee that real rates are positive and that interest rates correspond to inflation.
In order to reduce losses, MTN Nigeria, the biggest mobile operator in the country, used the increased liquidity to cut letters of credit commitments by 41.6%, from $416.6 million in December to $243.4 million.
In an effort to increase liquidity, the Central Bank of Nigeria has raised its benchmark rate by 600 basis points in order to draw in capital and removed the currency’s peg, allowing the market to set the value of the naira.
