Since the Central Bank of Nigeria commenced its aggressive interventions in the interbank and bureau de change segment of the foreign exchange market, the Bank, as of Friday last week, had pumped a total of $7.136 billion into the market.
According to figures compiled by THISDAY, between February 21 and June 21, 2017, the CBN intervened in the market by selling the greenback to authorised dealers in 32 sessions.
The dollar sales have been targeted at retail invisibles for PTA, BTA, school fees and medicals, wholesale forwards, SMEs, and Secondary Market Intervention Sales (SMIS).
The forays by the central bank in the past four months has helped in eliminating the pressure in the forex market, ensured exchange rate stability and eliminated currency speculators.
Owing to this measure, the naira which fell to a historic low of N525/$ on the parallel market four months ago, has been trading around N360/$ since April.
A breakdown of the dollar sales showed that $680 million was pumped into the market in February; $1.542 billion was sold in March; $1.616 billion in April; $2.102 billion in May; and $1.196 billion in June.
The $2.102 billion sold by the Bank in May was the highest in four months. In May, the central bank sold dollars in eight different sessions.
Commenting recently on how far the CBN would go to sustain its market interventions, its governor, Mr. Godwin Emefiele had said: “I have said it and I will repeat myself that the interventions will be more vigorous than before to underscore the fact that we are determined to ensure that the Nigerian economy recovers, by making sure that foreign exchange is made available to operators of the economy to conduct their businesses.”
Also, speaking in a recent interview with THISDAY, Emefiele explained that the initiative was to ensure that Nigerians that have legitimate demand for FX were not excluded from the market.
On April 21, the central bank also bolstered confidence in the market with the opening of an Investors and Exporters’ (I&E) window, which has continued to excite both local and foreign investors as well as the various international rating agencies, and seen to the convergence of the rates on both segments of the market
The naira sold at N368 to the dollar on the parallel market on Friday, while in the I & E window it went for N367.83 to the dollar.
“The convergence of rates, at least for a segment of the market, demonstrates the success of the central bank’s interventions,” Africa’s Chief Economist at Standard Chartered Bank, Razia Khan said.
Khan said by addressing the demand for dollars, the central bank was able to reduce speculative attacks on the local currency and its precipitous decline.
Nigeria’s external reserves stood at $30.221 billion on Friday.