The Central Bank of Nigeria (CBN) spent $380 million in two days to prop up the ailing naira, after conducting special forex interventions to shore up the local currency, a Reuters report has revealed.

Latest data on the central bank website yesterday showed that the forex reserves fell to $32.66 billion as at February 16, down by 1.2 per cent from $33.04 billion by February 13.

Foreign reserves have fallen by 5.3 percent from a month ago as huge demand for the greenback continues to depress the naira.

The central bank intervened for the third straight session yesterday to defend the naira by selling dollars below its official band, but the currency traded weaker in the interbank market.

Dollar sales by an oil firm were traded at a weaker level than in the earlier sale by the central bank, dealers said.
The bank once again sold dollars below its official band, at N198 to the US currency, and again banned banks from reselling dollars bought at its currency auction to other banks to curb speculation.

All the trades by the bank have been outside its own target band of N160-N176 to the dollar set in November when it devalued the currency by 8 percent to save its foreign reserves.

On Monday and Tuesday, it sold dollars at N198 naira, dealers said.

“The market is weaker than the central bank rate … counterparties are selling dollars based on how they were able to buy it,” a dealer at a major lender said.

The naira crashed through a psychologically important level of 200 to the dollar last week in a rout triggered by weak oil prices and escalating tension over the postponement of a presidential election Africa’s biggest economy, prompting the central bank to step up its intervention.

The central bank has been selling dollars in a special intervention since Friday, spending $380 million in two-days to shore up the naira and curb speculative attacks, which it says is the reason behind the weaknesses in the currency.
Addax Petroleum sold $7 million to some lenders to buy naira for its local obligations, testing the naira’s true level as the currency immediately weakened to N203.50 to the dollar.

The central bank’s special interventions have kept the naira trading within a range of between N197 to N199.50 .