CBN anticipated to inundate the market with US dollars in reaction to currency crisis

The Central Bank of Nigeria (CBN) is reportedly devising strategies to halt the continuous depreciation of the naira against the US dollar.

One of these tactics involves introducing a substantial influx of cash in the form of US dollars into the market.

As of Monday, August 14, the naira concluded its trading at N744.41/$ at the Investors & Exporters (I&E) window, while it stood at N935/$ in the parallel market.

Since June, when the Central Bank of Nigeria (CBN) implemented a unified exchange rate structure, merging all rates into the I&E window, the naira's value has plummeted by more than 40 percent.

A member of the CBN board, who purportedly communicated with THE Nation, disclosed, "At this juncture, the bank intends to infuse foreign exchange into the market to stabilize the exchange rate. This move is crucial, as it aligns with the purpose of maintaining reserves to uphold the naira's stability whenever needed."

He further indicated that this decision is part of the "routine function of management," and added, "It's a necessary step to support the naira's current situation."

The board member contended that in order to prevent further deterioration of the naira's value, the advisable strategy is to "inundate the market with foreign exchange."

"While I understand that this government initially favored a non-interventionist policy, the current circumstances necessitate considering such measures. Even in a free market, the surge in demand is significant and must be managed with appropriate policies," he stated.

Given the limited availability of foreign exchange, he emphasized that addressing the issue requires a multifaceted approach that considers both demand and supply aspects.