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Market Digest Nigeria

Finance

CBN Intervenes in Forex Market with $476.83 million, CNY41.14 million

In a move to strengthen local currency, the Central Bank of Nigeria (CBN) defended Naira with an accumulative sum of $476.83 million and CNY41.14 million in May.

Information available to our correspondent revealed that the apex bank in May intervened in the foreign exchange twice. The CBN in early May made interventions in the Retail Secondary Market Intervention Sales (SMIS) of the Foreign Exchange market totalling $271.83 million and CNY41.14 million. Closing May, the apex bank also defended the naira with sum of $205 million into the inter-bank Foreign Exchange Market, in its continued push to sustain liquidity in the sector. The breakdown of the N205 million in May 28 showed that CBN’s authorized dealers in the wholesale segment of the market were offered $100 million, while the Small and Medium Enterprises (SMEs) segment received the sum of $55 million. The sum of $50 million was allocated to customers requiring foreign exchange for invisibles such as tuition fees, medical payments and Basic Travel Allowance (BTA), among others.

The Director, Corporate Communications Department at the CBN, Mr. Isaac Okorafor,  always maintained that  the Bank’s effort had helped to guarantee stability in all the exchange rate windows. He further noted that the dogged implementation of the country’s foreign exchange restriction to some 43 items had boosted activities in the industrial sector. He also noted that the move had equally increased the level of confidence investors and the public had in the Naira. At the first intervention in May 3, Okorafor had expressed satisfaction with the performance and stability of the country’s economy, noting that the country would experience more growth as the Bank has placed restrictions on the purchase of forex from the Nigerian foreign exchange market for items in the textile and cotton value chain.

Despite the CBN’s intervention, the nation’s foreign exchange reserves rose by $295.12 million to $45.087 billion as at May 27 from $44.792 billion on April 26, the latest statistics from the CBN revealed. The CBN Governor, Godwin Emefiele, said the introduction of the Investors & Exporters window, along with improvement in domestic production of goods, helped shore up the country’s external reserves. He said, “Transactions have reached over $48billion since the inception of the window and our foreign exchange reserves have risen to $45billion in April 2019 from $23billion in October 2016. Nigeria’s current stock of external reserves is now able to finance over nine months of current import commitments. “With improved availability of foreign exchange, the exchange rate at the I&E FX window has remained stable over the past 24 months at an average of N360/$, and the parallel market exchange rate has appreciated from N525/$ in February 2017 to N360/$ today.”

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