The naira recovered against the United States dollar on the interbank yesterday after the Central Bank of Nigeria (CBN)’s direct intervention to calm the market and increase the supply of the dollar at its bi-weekly foreign exchange auction.
The naira ended at N162.95 to the dollar on the interbank yesterday, recovering from a 22-week low of N163.68 it hit the previous day. It ended at N162.65 on Tuesday after a central bank intervention, dealers said.
Dealers said the central bank has consistently intervened in the interbank market and has also increased the amount of dollars sold at its auction to support the naira.
At the auction yesterday the bank sold $400 million at N155.90 to the U.S. dollar, higher than the $300 million it auctioned on Monday.
“The central bank is interested in keeping the exchange rate below N163 to the dollar level,” one dealer told Reuters, adding that hiking dollar supply at its auction was a signal.
Nigeria’s foreign exchange reserves hit a 21-month high of $37.64 billion by May 28, which could give the central bank some flexibility to defend the naira in the coming days. The bank still maintains its target band of between N150 and N160 to the dollar.