CBN Pledges to Sustain Dollar Injection in Forex Market

By Obinna Chima

The Central Bank of Nigeria (CBN) at the weekend indicated that it would sustain its foreign exchange intervention into various segments of the market, thereby heightening expectations that the naira will appreciate in the coming days.

The expectations became rife following the inability of the authorised dealers to fully subscribe to various amounts offered by the bank on two consecutive times last week. Those two events alone sent jitters to currency speculators perceiving dollar glut as imminent in the market.

Laying credence to this development, the spokesman of the CBN, Mr. Isaac Okorafor, confirmed the anticipated interventions in most segments of the market during the week, with effect from today.

According to him, the Bureau De Change (BDC) and the Small and Medium Scale Enterprises (SMEs) along with other major segments would also receive the adequate intervention with a view to providing liquidity in the entire foreign exchange market.

Meanwhile, manufacturers have praised the bank for its foreign exchange management strategy adopted recently.

The Director General of Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadiri, was recently quoted as saying the   “the recent pronouncement of the CBN comes as a relief. If the intervention is sustained, there’s no doubt that we will have continued improvement in sourcing raw materials.”

According to analysts at Lagos-based CSL Stockbrokers Limited, the CBN has stayed relentless in its attempts to keep the market awash with FX liquidity.

“Things appear to be playing out in the CBN’s favour as far as exchange rates are concerned. The spread between parallel and official rates have now narrowed since February and this meets at least one of the CBN’s objectives. 

“The CBN has effectively sent a clear signal that there will be no further official rate devaluation, neither will there be a currency float. And with FX reserves still on the rise, we believe the CBN may remain true to its word,” they added in a note yesterday.

CBN Governor, Mr. Godwin Emefiele, had last Thursday met with President Muhammadu Buhari, following which he disclosed that the president was pleased with the gains recorded in the forex market, following the sustained intervention by the central bank.

Emefiele said prices of crude oil in the international market which had been hovering between $55 and $56 per barrel had also helped in improving revenue generation and consequently fortified the nation’s currency.