FMDQ Reports That CBN Has Spent a Total of $581 Million in FX Interventions

According to data from the FMDQ Securities Exchange, the Central Bank of Nigeria (CBN) invested $581 million in foreign exchange interventions at the Nigerian Autonomous Foreign Exchange Market this year.

Also, Mr Olayemi Cardoso, the central bank governor, said the apex bank is not using the country's foreign reserves to support the value of the naira. He made this announcement on Wednesday during the ongoing 2024 Spring Meetings of the World Bank and the International Monetary Fund in Washington, DC.

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The FMDQ data also revealed that the CBN has only sold $581 million on the official market, making up a meager 3.2% of the total market turnover of $17.938 billion during the same period.

It was reported that since the CBN started selling dollars to BDCs this year, it has sold about $60 million to them in the last two months, which shows that the CBN interventions are not the cause of the naira's appreciation over the past month.

The CBN data also shows that the foreign exchange reserves were $32.29 billion as of April 15, 2024, down from $34.45 billion on March 18, 2024.

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Cardoso stated that the repayment of debt was the cause of the decrease in foreign reserves. "What you see concerning the shifts in our reserves is the shift you will find in any country's reserve situation, where, for example, debts are due, certain payments need to be made, and they are made because that is also part of keeping your credibility intact," he said.

Back Story
It was reported that the Central Bank of Nigeria (CBN) has reduced commercial banks' Loan-to-Deposit Ratio from 65% to 50%.

With this step by the apex bank, Deposit Money Banks can now lend only 50% of their deposits to customers.

The apex bank issued this new directive on April 17, 2024, with reference number BSD/DIR/PUB/LAB/017/005 and signed by the CBN Acting Director of Banking Supervision, Adetona Adedeji. The apex bank reported that it had reduced the Loan-to-Deposit ratio by 15% points, down to 50%.

All Deposit Money Banks are currently mandated to adhere to this revised LDR. The CBN has stated that average daily figures will be used to gauge compliance with this directive.

Additionally, while DMBs are encouraged to maintain robust risk management practices in their lending activities, the CBN said it was committed to continuously monitoring compliance with the directive, a report stated.

Adedeji has also called on all banks to acknowledge these modifications and adjust their operations accordingly.