Economy

Nigeria’s Inter-Bank Forex Market Gets $142.5m CBN Inflow

The Central Bank of Nigeria (CBN) on Monday, July 10, 2017, injected a total of $142.5m into the inter-bank foreign exchange, days after intervening in the retail segment of the market with the sum of $254.3m.
A breakdown of the Monday’s intervention indicates that the sum of $100m went to dealers in the wholesale segment and $23m to the Small and Medium Enterprises (SMEs) segment.
Those requiring foreign exchange for invisibles such as tuition fees, medical payments and Basic Travel Allowance (BTA) received $19.5 million.
Confirming the latest round of intervention, spokesperson of the apex bank, Isaac Okorafor, said the CBN will continue to carry out its regular mediation in the market so as to keep the market liquid and guarantee the international value of the naira in line with its mandate.
Reiterating the resolve to intervene in the market based on bids received from dealers on behalf of their respective customers, Okorafor said the CBN will not relent in ensuring transparency and efficiency in the sale of forex.
According to him, this commitment prompted its directive that dealers make public their forex utilisation, urging all stakeholders to continually play their roles to ensure transparency in the market.
It will be recalled that the CBN last Friday intervened in the retail segment of the forex market to the tune of $254.3m following bids received from forex dealers by the apex bank. The figure sold by the Bank was for companies in the raw materials, agricultural, airline and petroleum industry.
Meanwhile, the Naira maintained its stand at the Bureau de Change (BDC) segment of the forex market, exchanging at an average of N364/$1 in Lagos, Abuja and Kano.
So far, the nation’s currency window for investors and exporters has traded around $3.83bn since it was established on April 24, with the naira trading strong than on the black market.
Traders said $407m were traded last week compared with $354.8m in the previous week, indicating a gradual return in investors’ confidence to the West African nation’s foreign exchange market.
“We have seen continuous improvement in dollar inflow into the market in recent time from offshore investors and this has also reflected in the volume of transactions at the equity market,” one currency trader told Reuters.
Before the window was introduced, the CBN was the main supplier of hard currency on the interbank forex market, after foreign investors fled Naira assets in the wake of an oil price slump in 2014.
A central bank spokesman last month said the bank was, on average, responsible for less than 30% of trading in the investor market.
The window, however, has effectively introduced yet another exchange rate to the five already in operation. These include a retail rate set by licensed exchange bureaus, as well as official and black market rates.
At the forex window, market regulator FMDQ OTC Securities Exchange quoted the naira at N364.56/$ on Monday, versus N367/$ on the black market.
The Naira traded at about N520/$ on the black market in February and N400/$ in the forex window when it opened in April, with the two rates then starting to converge.
Commercial lenders quoted the N306/$ on Monday, the level they have been quoting for around the last two weeks.

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