CBN Intervenes in FX Market

The Central Bank of Nigeria (CBN) last Friday made interventions in the Retail Secondary Market Intervention Sales (SMIS) of the foreign exchange market totaling $271.83 million and CNY 41.14million.

Director, Corporate Communications at the Bank, Mr. Isaac Okorafor, also confirmed that the sum of CNY41.14 million was for payment of Renminbi-denominated Letters of Credit for agriculture as well as raw materials. Friday’s transaction was in addition to the $205 million injected into the Wholesale, Small and Medium Enterprises, and Invisibles segments of the market on Tuesday, April 30, 2019.

Okorafor expressed satisfaction with the performance and stability of the country’s economy, noting that the country would experience more growth as the Bank has placed restrictions on the purchase of forex from the Nigerian foreign exchange market for items in the textile and cotton value chain. Meanwhile, the naira exchanged at N360/$1 on Friday, in the Bureau De Change (BDC) segment of the market.

Exactly two years after the Nigerian Autonomous Foreign Exchange Fixing Mechanism (NAFEX), commonly known as the Investors’ &Exporters’ (I&E) window was introduced by the CBN, operators and the central bank have continued to hail the initiative.

The central bank had introduced the forex window as well as a raft of other measures to improve dollar liquidity on April 27, 2017, when the country faced a severe forex crisis.

The central bank had explained that the purpose of the window was to boost liquidity in the forex market and ensure timely execution and settlement for eligible transactions. The cumulative transactions on the I&E window since the central bank created the market 24 months ago was put at $50 billion as at the end of March 2019.