FX market upbeat as CBN clears $4bn demand backlog

Nigeria’s new foreign exchange market made a robust take-off yesterday, Monday, June 20, 2016, as the Central Bank cleared a $4billion backlog of FX demand and appointed 15 of its commercial lenders as primary forex dealers.

The Apex bank sold $530 million for 280 naira per dollar at a special auction and later sold a further $86.5 million directly on the interbank market at 281 to 285 naira, traders said.

Consequently, the local currency tumbled 30 percent after the CBN lifted its peg on the currency, traders said on Monday.

BusinessDay sources said dealers included Stanbic IBTC Bank, Standard Chartered Bank, Citibank, Zenith Bank, Access Bank , UBA, Sterling Bank, FCMB  and Sterling Bank, among others.

In a statement released last night, the CBN was happy that its objectives to clear the FX demand backlog, perform its role as strictly a market intervention participant; and re-launch a functioning and efficient inter-bank market, were being met.

The apex bank said that “ the CBN, in line with its desire to promote a transparent, liquid and efficient market, and in order to engender market confidence and ensure credible price formation, intervened in the market through a special Secondary Market Intervention Sales (SMIS) addressing the issue of the FX demand backlog by clearing $4.02bn through spot and forward sales. This served in no small way to stimulate price discovery, with the determination of a marginal rate of $/₦280.00 through the Special SMIS process.

“So, we can state to you categorically, that the FX demand backlog has now been cleared and behind us for good,” the statement added.

The CBN further assured the market participants and the general public that the bank was resolutely committed to making the Nigerian FX market globally competitive, credible, transparent, liquid, and efficient. It lauded market participants that collaborated in their conduct to achieving these feats and looked forward to another successful and historic day on June 27, 2016, when the market launches its innovative hedging product, the Naira-settled OTC FX Futures.