CBN Debits Banks N126bn In Bid To Strengthen Naira

by on June 22, 2020

As part of measures to strengthen the naira, the Central Bank of Nigeria (CBN), has debited N216bn from banks with excess cash holdings.

Last week, Reuters reported that the naira had come under intense pressure in recent months during the coronavirus pandemic.

A sharp fall in the price of oil – Nigeria’s main export – and departing foreign investors caused a large financing gap.

The currency had been hitting new lows on the over-the-counter spot and black markets since March after the central bank adjusted its official rate, implying a 15 per cent devaluation to absorb the impact of an oil price crash. On Friday, the dollar exchange to the naira at N455/$ at the parallel market.

The naira traded at N385 on the official market last week, weaker than a quoted rate of 361 backed by the central bank.

According to banking sources, the liquidity withdrawal came before a foreign currency auction on Friday.

A national daily quoted a banker to have said the CBN is trying to manage the FX rate using the cash reserve ratio, adding that the debits had become frequent and over the 27.5 per cent limit.

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