Oil companies resume dollar sales to banks as CBN eyes supply

The Central Bank of Nigeria (CBN) has permitted International Oil Companies (IOCs) to resume the sale of US dollars to banks in a move aimed at injecting liquidity into the Investors & Exporters (I&E) foreign exchange market.

Developments in the foreign exchange market yesterday suggest that the restriction placed on the IOCs from selling dollars to dealing member banks had been lifted, according to a source familiar with the matter.

“We expect this to inject additional liquidity into the Investors & Exporters window and help address the existing backlog of US dollar demand in the market,” the source said.

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The CBN’s acting governor, Folashodun Shonubi, has been reversing the policies of suspended Governor Godwin Emefiele since he was handed the job by President Bola Tinubu who only took the helm of affairs in Nigeria in May but has moved quickly in delivering the thorough house cleaning of monetary policy he promised.

Since floating the naira and ending years of a hard currency peg that drained dollars from the economy and spooked investors, the CBN is now focusing on boosting dollar supply to help ease the pressure on the naira which lost over 60 percent of its value in one fell swoop following the long overdue reform.

The naira gained 1.2 percent yesterday at the I&E window. The total fx turnover was up 20 percent to $89.37 million from $73.86 million worth of trades on Tuesday.

Details later…