Obinna Chima
As the demand for foreign exchange continues unabated in the parallel market segment of the forex market, the Central Bank of Nigeria (CBN) on Monday unfolded yet another policy measure, stating that it has opened a special forex window for small and medium scale enterprises (SMEs).
This, according to the central bank, would enable small and medium-sized businesses import eligible finished and semi-finished items, not exceeding $20,000 per operator each quarter.
CBN spokesman, Mr. Isaac Okorafor, explained in a statement that the Bank’s special intervention was necessitated by findings that a large number of SMEs were being crowded out of the forex space by large firms.
He did not add that the crowding out has forced several of such businesses to turn to the parallel market to meet their forex requirements, effectively increasing demand for the greenback on the streets.
According to him, under the special arrangement, enterprises with employee strengths of between 10 to 199 and an asset base of between N5 million to less than N500 million will be offered the opportunity to import eligible items within the approved threshold.
Okorafor further disclosed that the central bank had begun the massive sale of forex in different sectors of the market this week.
The CBN also continued its intervention in the forex market on Monday, offering the sum of $100 million to authorised dealers at an auction in the interbank wholesale window.
It also sold $10,000 to each Bureau de Change (BDC) operator to meet the needs of low-end users in the country.
Okorafor said that the dealers in the wholesale segment would have value for their respective bids on Tuesday.
According to Okorafor, of the $100 million offered by the CBN last Thursday, $99,544,417.45 was picked up by dealers.
Meanwhile, operators in the BDC segment have duly funded their accounts with the CBN in anticipation of picking up $10,000 each today.
Feelers also indicated that the CBN would continue its special intervention in the market with the sale of more dollars in both the retail and wholesale windows in the course of the week.
Findings by THISDAY further showed that despite the sustained interventions by the CBN, the country’s external reserves continued to rise.
The reserves, derived mainly from crude oil earnings, climbed by $59 million to $30.366 billion as of April 7, compared with $30.307 billion on April 3.
The naira, however, maintained its previous day’s value of N405 to the dollar on the parallel market on Monday. On the official market, the naira depreciated to N328.50 earlier in the day before closing at N306.15 after the central bank’s intervention.
“In the weeks ahead, the CBN will sustain its intervention through the sale of foreign exchange to all segments of the market, that is, PTA/BTA, Wholesale SMIS, Retail SMIS and the BDCs.
“The Bank will sell short tenured forwards of 7-30-day maturities to meet the demand of manufacturers and all other foreign exchange users.
“These significant injections of foreign exchange into the market should reassure all foreign exchange users of our determination to continue to meet all legitimate FX demand in the market while striving to achieve exchange rate stability in the market,” Okorafor explained.
