Again, CBN Pumps $170m into FX Market

In a bid to sustain the tempo of foreign exchange (FX) supply to the interbank FX market and ensure improved dollar liquidity, the Central Bank of Nigeria (CBN) yesterday intervened with a total of $170 million.

A breakdown of this showed that the central bank sold the sum of $100,000,000 as wholesale interventions, just as it sold about $70,000,000 to meet requests for Business/Personal Travel Allowances.

The latest dollar injection by the CBN took the amount so far offered in the interbank forex market within the past few weeks to over $1.2 billion for both wholesale and retail interventions.

Disclosing this yesterday, the CBN Acting Director, Corporate Communications, Isaac Okorafor, said the Bank remained resolute in ensuring that it supplies enough forex to genuine customers of Deposit Money Banks and increase liquidity in the market.

According to him, the uniqueness of the Wholesale Forwards was that banks are allowed to use their winnings from auctions to fund matured obligations to meet Letters of Credit remittances, extinguish bills for collection and other forex demands.

With this development, importers who had hitherto been using bills for collection will now experience relief instead of having to patronize other more expensive sources.

It will be recalled that the CBN only on Tuesday, March 7, 2017 injected another sum of $100m into the interbank foreign exchange market in its resolve to ease the challenge of access to foreign exchange by genuine customers.

However, the naira closed at N462 to the dollar on the parallel market yesterday, weaker than the N460 to the dollar it was the previous day.

However, the effect on the parallel market was neutral as the naira maintained its previous day’s value of N460 to the dollar in Lagos.

A former economic adviser to the President and Minister, National Planning Commission, Professor Ode Ojowu had said: “It appears this time around, the CBN has decided to become smarter than the market manipulators, by putting on its cap of authority to look beneath the market forces.”

It will be recalled that the CBN, in February 2017, changed its forex rule supply to guarantee supply to both small and the big end-users. The policy has restored stability and bolstered market confidence in the market.