Forex: CBN pumps $1.3 bn to keep market afloat

Within the five weeks of August, the Central Bank of Nigeria (CBN) pumped N1.301billion into the foreign exchange (forex) market to boost liquidity and settlement for eligible transactions.

The CBN spokesman, Mr Isaac Okoroafor, had hinted earlier in the month that the apex bank would raise the market liquidity in the coming days to enhance stability and flexibility, to ensure that hard currency would be available for genuine demands of individuals and business concerns.

The apex bank kickstarted the intervention on August 7 with $195million spread across the three segments of the market; the wholesale, Small and Medium Enterprises(SMEs) as well as the invisible.

In the wholesale segment of the interbank forex,it auctioned $100million, while it made $50 million and $45million available to the SMEs and the invisible segments respectively.

Okorafor explained that the intervention followed a major boost of about $462.34million provided to the three segments in the previous week , made up of $267.34million for the retail Secondary Market Intervention Sales(SMIS); $100million as wholesale intervention ;$50million for SMEs forex window and $45million for the invisibles.

The highest boon came from the apex bank on August 15, when it made $364 million available to the interbank forex market. A breakdown showed that retail SMIS got the biggest allocation of close to $264.2million followed by $100million offered the authorised dealers in the wholesale window.

On August 21, it offered $195million in the three segments of the market.This comprised $100million auctioned at the wholesale interbank forex market;$50million provided to the SMEs forex window and $45million for the invisibles.

The apex bank came back the following week, August 28, with $250 million injection, offering $100million in the wholesale segment; $85millon in the SMEs and $65million for the invisibles.

The last Thursday of the month witnessed another round of interventions, as CBN came out that day, August 31, with $297 million to boost the retail SMIS segment of the market.

Although, the apex bank did not state how much was routed through the special Investors’ and Exporters’ (I&E) forex window during the month, but its Governor, Godwin Emefiele, disclosed at a public forum that about US$4.7 billion had so far been recorded through the window since April.

“In order to further extricate the lingering bottlenecks, increase transparency and boost supply in the FX market, the CBN, in April 2017 introduced the special Investors’ and Exporters’ (I&E) FX Window. The establishment of that special (I&E) window has tremendously facilitated market driven transactions and has catered for the FX needs of investors and exporters. As a result, we have seen an appreciably improved FX supply due to the introduction of the window.

So far, about US$4.7 billion of foreign exchange inflow has been recorded through this window since April 2017”, he stated.

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