Forex Market: CBN Provides $300m To BDCs, SMIS As Naira Remains Stable

The naira maintained a relatively stable trend following the resumption of dollar sales by the Central Bank of Nigeria to both the wholesale and the retail segments of the foreign exchange market.

Since resumption of foreign exchange sales to the country’s registered Bureau de Change Operators, the retail segment of the foreign exchange market has so far received $200m from the apex bank.

To further boost liquidity levels and maintain stability in all segments of the market, $100m was sold by the CBN through the Secondary Market Intervention Sales on September 22.

The apex bank through its  Trade and Exchange Department announced the resumption of forex sales to BDC at N386 per dollar starting August 31, 2020.

Hit by low oil prices occasioned by the Coronavirus pandemic, the CBN stopped the sale of forex to BDC operators on March 27 as the country went into lockdown.

With the drop in oil prices and worsening balance of payment, the naira plunged at the unofficial market from N395 per dollar on March 27, to N477 on August 28.

Highly attributed to the CBN dollar boost, as of the close of weekly sales on September 25, the CBN spot rate traded flat at N379 a dollar, while the rate at the parallel market depreciated N2 to settle at N467 per dollar.

At the Nigerian Autonomous Foreign Exchange Fixing, the rate closed flat at N386 to a dollar, while In the Importer and Exporters Window, turnover fell 57.1 per cent to $348.8m from the $812.8m recorded in the previous week.

The performance of the local currency during the week was despite the drop in crude oil prices by 4.4 per cent  to $41.74 per barrel from $43.68 traded last week following the second wave of Covid-19 cases in Europe.

The weakened oil prices resulted in the slump of Nigeria’s foreign reserves by 0.1 per cent to $35.8bn as of September 23, 2020.