CBN injects fresh $170m into forex market …as naira appreciates against dollar

By The Citizen
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The Central Bank of Nigeria (CBN) on Thursday night again intervened in the foreign exchange market with the injection of additional $170m in the interbank market.

The apex bank said in a statement on Thursday night that while the sum of $100m was offered as wholesale interventions, the sum of $70m was released to meet the requests for  Business and Personal Travel Allowances.

The latest intervention according to the CBN brings the total amount so far released into  the interbank forex market within the last three weeks since it began its intervention to about $1.35bn.

The Acting Director, Corporate Communications Department  CBN while confirming the release said that the apex bank remained resolute in ensuring that it supplies enough forex to genuine customers of Deposit Money Banks and increase liquidity in the market.

He said, 'The uniqueness of the Wholesale Forwards was that banks are allowed to use their winnings from auctions to fund matured obligations to meet Letters of Credit remittances, extinguish bills for collection and other forex demands.

'With this development, importers who had hitherto been using bills for collection will now experience relief instead of having to patronize other more expensive sources.

'Thursday's injection by the CBN takes the amount so far offered in the interbank forex market within the past few weeks to over $1.2bn for both wholesale and retail interventions.'

During the first intervention in the foreign exchange market last week, the CBN had offered $500m for sale to banks, but not all of them provided enough naira backing to pay fully for their respective bid amounts.

Meanwhile, the Naira on Thursday marginally appreciated against the dollar at the parallel market.

The Nigerian currency exchanged at N462 to a dollar, after it closed at N465 on Wednesday, while the Pound Sterling and the Euro closed at N550 and N477, respectively.

At the Bureau De Change (BDC) window, the Naira was sold at N399 to a dollar CBN controlled rate, while the Pound Sterling and the Euro closed at N550 and N500, respectively. The Naira exchanged at N305.80 at the interbank market.

Currency traders expressed optimism that liquidity boost in the market would help to shore up the Naira rate.

However, An economist, Mr Harrison Owoh has attributed the instability in the exchange rate in spite of liquidity boost in the FOREX market to excessive demand for dollars.

Owoh said that the injection of 1.14 billion dollars by the Central Bank of Nigeria (CBN) to the interbank market were majorly at the service of letters of credits and invisibles.

According to him, it is the cash at hand that brings down the exchange rate not mere letters of credit.

He explained that China, which is the seat of importation business, was on holiday for a full month, adding that the vacation slowed down importation activities by Nigerian importers.

The economist said that since the resumption in importation, the demand for FOREX had outstripped its supply.