Nigeria’s Investors & Exporters FX window attracts over $2.2bn inflows

Nigeria’s foreign exchange window opened in April by the Central Bank of Nigeria (CBN) for investors and exporters has attracted up to $2.2 billion worth of transactions, according to latest figures from the regulator.

This is without major interventions by the CBN which is also a market participant at the window and also functions to promote liquidity and ensure professional conduct.

The window tagged: “Investors’ & Exporters’ FX Window” targets to boost liquidity in the forex market and ensure timely execution and settlement for eligible transactions.

Supply of foreign currency to the segment is through portfolio investors, exporters, authorized dealers and other parties with foreign currency to exchange to Naira, according to a brief announcing the policy about two months ago.

The CBN has introduced different bold measures to ensure liquidity in the forex market and naira stability and drive rate convergence.

Consequently, the naira remained stable with a high possibility of further strengthening in the FOREX market on Tuesday, exchanging at an average of N363/$1 in the BDC segment of the market.

The apex bank anticipates a further lift of the local currency as it injected another $418 million into various segments of the inter-bank Foreign Exchange market on Tuesday.

Figures obtained from the CBN  indicate that the retail segment of the market received the highest intervention with a total of $226 million, followed by the wholesale window that received an allocation of $100million.

The Small and Medium Enterprises (SMEs) window received a boost of $50 million while the invisibles segment, comprising Business/Personal Travel Allowances, school tuition, medicals, etc. was allocated the sum of $42 million to meet the demands of customers.

 The CBN spokesperson, Isaac Okorafor, also confirmed that the “volume of currency trading in the Investors’ & Exporters’ (I&E) FX Window had cumulatively hit heights of $2.2 billion since the CBN introduced it on Friday, April 21, 2017 to boost liquidity in the forex market and ensure timely execution and settlement for eligible transactions.”

Okorafor expressed confidence that the interventions will continue to guarantee stability in the market and ensure availability to individuals and business concerns.

The CBN, on a Monday, injected $413.5 million into the inter-bank market in its unrelenting bid to guarantee liquidity in the market as well as shore up the international value of the naira.

In May, the Governor of the Central Bank, Godwin Emefiele assured that he would continue to ensure those injections until different FX rates converge downwards.

“I have said it and I would repeat, that the interventions would be more vigorous and intense to underscore the fact that we are determined to ensure that the Nigerian economy recovers by ensuring that foreign exchange is made available for all sectors of the Nigerian economy to conduct their business,” the governor stated after the May meeting of the Monetary Policy Committee which, for the fifth time, retained all benchmark rates.

A breakdown of Monday’s figures shows that the apex Bank offered some $100 million to authorized 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 customers in that sector.

Meanwhile, analysts see the increase in the volume of transactions in the Investors’ & Exporters’ (I&E) segment as a positive sign of the return of confidence in the financial markets as clearly demonstrated by the activities in the stock market.

They say that the sentiments of investors had strengthened since the CBN established that window, and has ensured greater flexibility in forex rate determination.

They, however, urged the CBN to continue its march towards the convergence of rates.