Nigeria’s Forex Market Sees Surge in Dollar Supply Amidst CBN’s Stabilization Efforts

Nigeria’s official foreign exchange market experienced a significant increase in dollar supply, reaching $440.13 million on Friday, amidst efforts by the Central Bank of Nigeria (CBN) to stabilize the foreign exchange rate.

This increase follows the implementation of new guidelines by the CBN to address the growing trend of banks holding prominent foreign currency positions, mandating banks to adjust their FX exposures.

The CBN aims to boost liquidity and narrow the gap between the parallel and official exchange rates. Despite concerns over excessive dollar liquidity held by banks, the move is expected to stabilize the exchange rate and attract foreign investors.

Meanwhile, S&P Global Ratings affirmed Nigeria’s sovereign credit ratings with a stable outlook, citing the government’s reform agenda as a positive factor.