In a bid to reduce the pressure in the foreign exchange market, the Central Bank of Nigeria on Wednesday increased its dollar sales to $400m at the bi-weekly auction of the apex bank, from $300m sold on Monday.

The CBN sold $400m at N155.90 to the United States dollar, compared to $300m sold at the same N155.90 on Monday.

The naira also eased further against the US dollar on the inter-bank despite the CBN’s direct intervention to calm the market and an increase in supply of the greenback at its bi-weekly foreign exchange auction.

The naira closed at N162.95 to the dollar on the inter-bank market on Wednesday, recovering from a 22-week low of N163.68 of the previous day.

Dealers said the CBN had consistently intervened on the inter-bank market and also increased the amount of dollars sold at its auction to support the naira.

Reuters quoted a dealer as saying, “The CBN is interested in keeping the exchange rate below N163 to the dollar level; hiking dollar supply at its auction was a signal.”

Foreign exchange reserves hit a 21-month high of $37.64bn by May 28, which could give the CBN some flexibility to defend the naira in the coming days, although the bank still maintains its target band of between N150 and N160 to the dollar.

The naira has fallen relentlessly in recent weeks, despite CBN interventions to prop it up, driven initially by dollar demand from fuel importers but later by an exodus of foreign investors out of bonds repatriating their returns.

Dealers said consistent CBN intervention in the inter-bank market was necessary to keep dollar demand from piling up as foreign inflows shrink.

“We hope the CBN will sustain its direct sales to the inter-bank market, otherwise the naira should cross the N164 level in the next few days,” another dealer said.

The naira weakened to a 22-week low against the US dollar on the inter-bank on Tuesday, following strong demand for the greenback that the CBN could not meet at its foreign exchange auction the previous day, traders said.

The naira eased to N163.68 against the dollar on volatile trades at the inter-bank market on Tuesday.

Source: Punch