CBN Releases $23.35bn Forex To Save Naira From Devaluation

The Central bank of Nigeria has injected $23.35bn in six months to stabilise the country’s foreign exchange market, this is according to data obtained from the apex bank.

The naira has been under severe pressure owing to Nigeria’s foreign exchange shortfalls over the years.

The apex bank on its part however made efforts to sustain its direct intervention in the foreign exchange market to manage demand pressure and ensure exchange rate stability.

The Chief Executive Officer, Economic Associates, Ayo Teriba, had said in an exclusive interview with THE WHISTLER, that Nigeria needs to source for additional foreign exchange earnings to stabilise the exchange rate pressure on the Naira.

He said looking for external liquidity to stabilise the forex market is the best option for the country, adding that if the government fails to stabilise the foreign exchange market, the economy economy cannot stabilise.

In the bid to intervene in the market, the Central Bank between the fourth quarter of last year and the first quarter of this year, funded the forex market with a total of $9.98bn and $13.37bn respectively.

A breakdown of the data for the fourth quarter of 2019 showed that the $9.98bn was sold by the CBN exclusively to authorised dealers.

The amount represented 0.4 per cent decrease, compared with the level in the third quarter of 2019.

The development, relative to the third quarter of 2019, reflected, mainly, the decline in foreign exchange sales to the Bureau De Change, interbank, swaps transactions and wholesale forwards in the fourth quarter 2019.

Of the $9.98bn foreign exchange sales to BDCs, Interbank, Swaps, Secondary Market Intervention Sales Intervention and Wholesale Forward Intervention fell by 11.2 per cent, 10.1 per cent, 8 per cent, 3.5 percent and 2.3 percent to $0.40bn, $1.65bn, $1.24bn, $0.31 and $3.34bn, respectively.

The apex bank’s forex sales to the Investors and Exporters window and Small and Medium Enterprises intervention in the fourth quarter, rose above their levels in the preceding quarter by 17.7 per cent and one percent to $2.62bn and $0.43bn, respectively.

During the fourth quarter, the average naira exchange rate to US dollar depreciated at the inter-bank, BDC segment, and the I&E Window.

In the first quarter of 2020, a total of $13.37bn was sold by the CBN to authorised dealers This figure represents a 28.4 per cent increase, compared with the $9.98bn level recorded in the fourth quarter of 2019.

The increase in the CBN intervention, according to findings reflects the rising demand and supply imbalance in first quarter, 2020 following the outbreak of Covid- 19 pandemic which impacted negatively on forex inflows.

The data revealed further that relative to the fourth quarter, the increase was reflected in foreign exchange sales to the I & E window, BDC segment of the market, secondary market intervention sales and wholesale forwards in the review quarter.

A breakdown of the $13.37 Q1 intervention showed, wholesale forwards intervention, interventions at the I & E window, sales to BDCs and SMIS rose by 77.2 per cent, 72.5 per cent, 12.9 per cent and 5.5 per cent to $2.08bn, $4.60bn, $3.76 bn and $1.68bn, respectively.

Also swap transactions, SME interventions and interbank sales fell by 36.4 per cent, 10.7 per cent and 3.4 per cent to $0.60bn, $0.36bn and $0.30bn, respectively.