Forex Market Sees $1.9bn Inflow In 5 Days

By Nse Anthony-Uko

(Sundiata Post) — The foreign exchange market last week saw an inflow of $1.9 billion through the Investors and Exporters (I&E) window and the interventions of the Central Bank of Nigeria (CBN) as the naira remained stable against the dollar on the combination of central bank intervention and rising commodity prices supporting the local currency.

The CBN had in its two interventions held last week pumped in $606.18 million as $1.29 billion flowed into the market through the I&E window. The highest inflow last week at the I&E window was on Tuesday when $361.38 million flowed in but it dropped to $137.62 million by Thursday.

Value of the naira at the I&E window opened the week flat at N360 to the dollar, the same at the close of the previous week and by Thursday, it had depreciated to N360.25 before closing the week at N360.2 to the dollar. The CBN spot rate opened the week at N305.60 and remained unchanged throughout the week.

The CBN during the week had pumped in more foreign exchange into the economy selling $396.18 million into the Retail Secondary Market Intervention Sales (SMIS) segment of the market in its move to guarantee liquidity in the forex market. This brought the total of foreign exchange sold by the apex bank last week to $606.18 million.

Earlier in the week it had sold $210 million to meet demand at the wholesale, Small and Medium Enterprises (SMEs) and the invisibles segment of the market. According to figures obtained from the CBN, the released sum is meant to meet obligations in the agricultural, airlines, petroleum products and raw materials and machinery sectors.

Confirming the figures, the bank’s acting director, corporate communications department, Isaac Okorafor said that interventions by the CBN in both the retail and wholesale sectors of the forex market were targeted primarily at ensuring liquidity in the market as well as encouraging production and trade, particularly now that the focus was on the promotion of local content.

Okorafor further explained that with the country’s reserves nearing $50 billion, CBN was even more determined to sustain the gains recorded through the various policy options the bank took in the course of stemming the depletion of the external reserves and steering Nigeria out of recession.

Beyond ensuring liquidity in the inter-bank sector of the market, he said CBN was committed to supporting efforts aimed growing the economy and further diversifying it away from oil. Despite rates closing at N362/$1 on Friday, Okorafor, insisted that the market would remain stable and that CBN would ensure it maintains the country’s external reserves in order to safeguard the international value of the naira.

The apex bank in its SMIS on March 23, 2018, intervened with the sum of $339.89 million, while also intervening in the inter-bank Foreign Exchange Market to the tune of $210 million, comprising of $100 million for the wholesale segment and $55 million for both the Small and Medium Enterprises (SMEs) and invisibles segment on Wednesday, April 18, 2018.