Transactions on CBN’s I&E Window Hits $48bn

Obinna Chima

The cumulative transactions on the Investors and Exporters’ (I&E) foreign exchange window of the Central Bank of Nigeria’s (CBN) have risen to $48 billion since the apex bank created the market 21 months ago, investigation has revealed.

The Director, Corporate Communications at the CBN, Mr. Isaac Okorafor, who confirmed this development in an interview with THISDAY, added that out of the stated amount of inflows, the apex bank purchased about $9.67 billion.
“The I&E window has attracted about $48 billion inflows since inception. Of this amount, the CBN purchased about $9.67 billion,” the CBN spokesman said in a note in response to THISDAY’s enquiries.

The surge in the inflows recorded on the I&E, it was learnt, was attributed to offshore investors interest in Nigeria’s fixed income securities.
The naira traded at N362.58 to a dollar on the I&E window yesterday.

The central bank had introduced the Nigerian Autonomous Foreign Exchange Fixing Mechanism (NAFEX), commonly known as the I&E window, in April 2017, including a raft of other measures to improve dollar liquidity, 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.

It had listed eligible transactions under the new window to include invisible transactions such as loan repayments, loan interest payments, dividends/income remittances, capital repatriation, management service and consultancy fees.
Also, on the eligible list were software subscription fees, technology transfer agreements, personal home remittances and any such other eligible transactions including ‘miscellaneous payments’ as detailed under Memorandum 15 of the CBN Foreign Exchange Manual.

While explaining that the invisible transactions under this window excludes international airlines ticket sales’ remittances, the CBN added that the window covers Bills of Collection and any other trade-related payment obligations, which are at the instance of the customer.
It is worthy of note that supply of forex to the window is through portfolio investors, exporters, authorised dealers and other parties with forex exchange to naira.

The CBN is a market participant at the window to promote liquidity and professional market conduct.
Nigeria’s forex reserves stood at $43.170 billion as of last Friday, representing a marginal increase by $95 million, compared with the $43.075 million it was at the beginning of the year.

As at the end of the fourth quarter 2018, aggregate forex inflow through the CBN amounted to $14.51 billion and indicated a 12.3 per cent and 1.3 per cent increase over the levels in the preceding quarter and the corresponding period of 2017, respectively.
The increase, according to the CBN Economic Report for Fourth Quarter 2018, reflected the rise in both oil and non-oil receipts, including proceeds from government debts, Treasury Single Account (TSA), third party receipts, interest on reserves and investments, unutilised funds from foreign exchange transactions, unutilised International Money Transfer Operators’ (IMTO) funds and other official receipts.

CBN Governor, Mr. Godwin Emefiele had at the last Monetary Policy Committee noted that the country has witnessed a convergence of the forex market.
According to Emefiele, there was a return of confidence by foreign investors as a result of the confidence in the management of the Nigerian foreign exchange market.

The CBN boss added: “As a result of the actions of the CBN, today all markets- in fact, the bureau de change market had come down to about N360. Today, they are even selling at slightly below N360.
“So, we have seen a convergence of the foreign exchange market in Nigeria today. When people sit and say that the economy has not done well, I think it is not a fair comment to be made both on government and monetary and fiscal authorities in the country today,” he added.