CBN to flood market with dollars in response to naira decline

The Central Bank of Nigeria (CBN) has reportedly formulated plans to stop the naira’s relentless decline versus the dollar.

One of these strategies is to flood the market with dollars cash.

The naira on Monday, August 14 closed at N744.41/$ at the Investors & Exporters (I&E) window and N935/$ at the parallel market.

The naira has lost over 40 percent of its value since June when the Central Bank of Nigeria (CBN) adopted a unified exchange rate structure and collapsed all rates into the I&E window.

A CBN board member, who reportedly spoke to THE Nation, said: “At this point, the bank is going to inject foreign exchange into the market to stabilise the exchange rate.

“It will be a desirable thing, and that’s the essence of having reserves to stabilise the naira at any point in time.”

He added that the decision is “a management routine function”, adding: “It’s a desirable thing to help the naira at this point.”

The board member argued that to stop the naira from further declining, the advisable thing is “as much as possible to flood the market with foreign exchange”.

“I am sure this government did not want any demand management policy, but such policies are also called for at this point.

“If they are operating a free market, 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.”

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