CBN opens forex market with $195m injection

On the first trading day after the two-day public holiday to mark the Muslim festival, the Central Bank of Nigeria (CBN), yesterday intervened in various segments of the interbank market to the tune of $195 million.
A breakdown of Wednesday’s intervention indicates that authorised dealers in the wholesale window segment received a $100 million offer from the bank, while the Small and Medium Enterprises (SMEs) and invisibles windows were allocated the sums of $50 million and $45 million, respectively.
Isaac Okorafor, CNB’s acting director, corporate communications department, confirmed the figures and disclosed that the bank was impressed by the high level of transparency exhibited by stakeholders in the market.
However, the cost of dollar rose at the interbank market, and investors and exporters window as the foreign exchange market resumed on Wednesday after the two-day holiday.
Dollar was quoted at the rate of N368.67k at the investors and exporters window, which was N6.51k or 1.8 percent higher compared with N362.16k traded on Friday last week, data from the FMDQ show.
At the interbank spot foreign exchange market, naira weakened marginally by N0.05k to close at N305.90k as against N305.85k on Friday last week, according to data from the FMDQ.
The naira continued its stability in the forex market, exchanging at an average of N363/$1 in the BDC segment of the market on Wednesday. The local currency was stable at the black market closing at the rate of between N367 and N368 per dollar at Festac and Apapa area of Lagos, respectively.
With the rate of inflation dropping from its April 2017 figure of 17.24% to 16.25 % at the end of May 2017, the CBN spokesman says the Bank remains upbeat that the fortunes of the Naira will improve further in the months to come.
The central bank has been intervening on the official market in the last few months to try to narrow the spread between rates on the official market and black market. It has sold over $5 billion since February.
In the last trading day before the holiday, the CBN sold a total $240 million to the Retail Secondary Market Intervention Sales (SMIS) for spot and forward deals.
The CBN also on Friday, confirmed the sale of forex to dealers in the Bureau de Change (BDC) segment of the market to meet the needs of low-end forex users.
According to Okorafor, the $240 million figure released to the Retail SMIS included deals initiated in the course of the outgoing week.
While expressing delight at the stability in the forex market, Okorafor said the Bank remained very optimistic that its goal of exchange rate convergence is fast becoming a reality, adding that the CBN was committed to ensuring liquidity in the forex market.