CBN Sells $7.8bn To Boost Forex Liquidity In 6 Months


Since the Central Bank of Nigeria (CBN) commenced its aggressive interventions in the interbank and bureau de change segment of the foreign exchange market, the bank, as of Friday last week, had pumped a total of $7.766 billion into the market.
In ensuring liquidity at the foreign exchange market the apex bank dollar sales have been targeted at retail invisibles for PTA, BTA, school fees and medicals, wholesale forwards, SMEs, and Secondary Market Intervention Sales (SMIS). Between February 21 and July 5, 2017, the CBN had intervened in the market by selling the dollars to authorised dealers in 35 sessions.
Following the liberalization of the foreign exchange market in February this year, the CBN has consistently sold foreign exchange to ensure liquidity in the system. This alongside the Investors and Exporters window introduced in April had helped strengthen the value of the naira from over N500 which it had declined to earlier in the year to around N367 which it has been selling at the parallel market.
A breakdown of the dollar sales showed that $680 million was pumped into the market in February; $1.542 billion was sold in March; $1.616 billion in April; $2.102 billion in May; and $1.436 billion in June and $390 million in the first week of July.
The $2.102 billion sold by the Bank in May was the highest in four months. In May, the central bank sold dollars in eight different sessions. The improved liquidity in the forex market had seen a convergence of rates as the naira sold at N369 to the dollar as at last week Friday, while the currency sold for N365.02 at the investors and exporters window.
This is also close to N362 to the dollar which bureau de change sells to their customers even as the naira depreciated at the interbank market selling at N306 to the dollar as against N304 which it was selling at the beginning of the year.
Commenting on how far the CBN would go to sustain its market interventions, CBN governor, Godwin Emefiele said, “the interventions will be more vigorous than before to underscore the fact that we are determined to ensure that the Nigerian economy recovers, by making sure that foreign exchange is made available to operators of the economy to conduct their businesses.”
He however assured that the initiatives of the apex bank were to ensure that Nigerians with legitimate demand for foreign exchange were not excluded from the market.
Despite the interventions, the 30-day moving average of the external reserves of the country in the first half of 2017 grew by 16 per cent, standing at $30.271 billion as at June 29, 2017 according to latest data on the website of the apex bank.
The reserves which stood at $26.097 billion at the beginning of the year rose by $4.2 billion by the end of the first half of the year, a figure that shows  a 14.8 percent improvement from a year ago, when they stood at $26.34 billion.
It was however down 0.36 percent from a month ago and 0.08 per cent lower compared to $30.297 billion which it closed the first quarter of the year. The reserves have risen slightly this year due to the rise in global oil prices.
Meanwhile, players in the retail segment of the Nigerian inter-bank foreign exchange market received a $254.3 million boost from the Central Bank of Nigeria (CBN) on Friday, July 7, 2017, following bids received from foreign exchange dealers by the apex Bank.
Information obtained from the CBN on Friday indicates that the deals in the retail window represent requests from the various sectors in the Secondary Market Intervention Sales (SMIS), thereby providing a boost to the respective sectors.
The acting director, Corporate Communications at the CBN, Mr. Isaac Okorafor, while confirming the foreign exchange sales, explained that the sale was in response to bids received from authorized dealers, on behalf of their customers, at the retail auction announced by the CBN on last week Wednesday.
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Source: News


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