CBN sold $543.5 million to authorised banks to curb volatility in the forex market, with new systems introduced to improve transparency.

[dropcap]T[/dropcap]he Central Bank of Nigeria (CBN) sold $543.5 million to authorised dealer banks between September 6 and 30, 2024, aiming to reduce volatility in the Nigeria Foreign Exchange Market (NFEM).

This move was prompted by high demand for commodity imports and seasoned forex demand.

Also read: CBN introduces new electronic foreign exchange matching system

The Central Bank of Nigeria (CBN) announced that it sold $543.5 million through a two-way quote system at the Nigeria Foreign Exchange Market (NFEM) between September 6 and 30, 2024.

This action was taken to address market volatility caused by high demand for commodity imports and seasoned forex demand, according to Omolara Duke, Director of the Financial Markets Department of the CBN.

In a statement, Duke explained that the transactions were conducted with a value date of T+2, meaning settlement occurred two days after the transaction date.

The move was part of the CBN’s efforts to stabilise the forex market by supplying foreign exchange (fx) to authorised dealers.

Duke also mentioned the introduction of the Electronic Foreign Exchange Matching System (EFEMS) to facilitate forex transactions in the NFEM.

This new system, set to launch after a two-week test run in November, will improve transparency, governance, and market efficiency. EFEMS will also provide real-time prices and reduce speculative activities, giving the CBN better oversight of the market.

The apex bank reassured the public that it would continue to support forex supply as part of its broader strategy for managing Nigeria’s foreign exchange market.