CBN Pumps another $413.5m into Forex Market

Obinna Chima
The Central Bank of Nigeria (CBN) on Monday intervened in the inter-bank foreign exchange (forex) market to the tune of $413.5 million.
The fresh dollar injection, according to the CBN, further underscored its resolve to guarantee liquidity in the market as well as shore up the international value of the naira.

Giving a breakdown of the Bank’s latest round of intervention, the CBN Acting Director in charge of Corporate Communications, Mr. Isaac Okorafor, disclosed that the CBN offered the sum of $100 million to dealers in the wholesale window, while the Small and Medium Enterprises (SMEs) window was allocated a total of $28 million.

The invisibles segment was allocated the sum of $25.5 million to meet the needs of those requiring forex for Business/Personal Travel Allowances, school tuition, medicals, etc.
According to Okorafor, the Bank also released the figures for the auction sales in the retail window last week, totalling $260million.

The CBN spokesperson said the Bank was optimistic that the naira will continue its strong run against the dollar and other major currencies around the world, considering that transparency in the market has ensured greater stability.
On the Bank’s objective to achieve convergence between the forex rates at both the inter-bank and BDC segments, Okorafor said the CBN was confident of achieving the goal soon, particularly if all stakeholders played by the rules.

He therefore charged all dealers, principally licensed Bureaux de Change (BDCs), to abide by the rule, for the sake of the economy.
Meanwhile, the naira continued to maintain its stability in the forex market, exchanging at an average of N362/$1 on the parallel market on Monday.

The Association of Bureaux de Change Operators of Nigeria (ABCON) at the weekend appealed to the CBN to review BDCs dollar buying rate downwards from N360 to N350/$1.

In a statement, ABCON President, Alhaji Aminu Gwadade indicated that owing to the central bank’s intervention in the foreign exchange (FX) which led to a convergence between BDC and parallel market rates, his members were finding it difficult to attract patronage.

“For now, the parallel market operators are taking over our business because BDCs rates and their selling rates are the same and this has to change,” Gwadabe lamented.

He, however, advised the CBN to ensure that ongoing stability in the FX market is sustained.
According to Gwadabe, the standard/average trade margin for BDCs across the world is 12 per cent, saying reviewing the rate to N350/$1 would be less than three per cent for Nigerian operators.