FX Market Gets Fresh $210m CBN Intervention

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The Central Bank of Nigeria (CBN) on Tuesday boosted the interbank foreign exchange (FX) market with another sum of $210 million.

A statement disclosed that the CBN offered the sum of $100 million to authorised dealers in the wholesale segment of the market. The Small and Medium Scale Enterprises (SMEs) segment received the sum of $55 million while the sum of $55 million was apportioned to invisibles such as tuition fees, medical payments and Basic Travel Allowance (BTA).

The Bank’s Acting Director, Corporate Communications Department, Mr. Isaac Okorafor, who confirmed the figures, reiterated CBN’s capacity to continue to sustain the foreign exchange intervention.

Okorafor urged authorised dealers to help sustain the confidence in the foreign exchange market by continuing to honour requests from customers with genuine needs.

The CBN had last Friday intervened in the Secondary Market Intervention Sales (SMIS) to the tune of $349.34 million.

Meanwhile, the naira exchanged at an average of N362/$1 in the BDC and parallel market segments of the market.

Reuters attributed the N362 to the dollar the greenback went for to the repatriation of dividends abroad following the end of the earnings season and as forward currency contracts mature amid tight dollar liquidity, traders said.

The naira has been trading at N360 to the dollar on the Investors’ and Exporters’ window for over six months after the central bank in April 2017 liberalised the currency for investors in the wake of a currency crisis brought on by low oil prices that also slashed government revenues.

Traders, however said the currency started to weaken last week as demand piled up especially from companies seeking to repatriate dividends and investors booking profits from local assets. Importers buying goods from abroad were also exerting pressure on the naira.

MTN’s Nigeria operation recently declared a dividend of N50 billion by its local unit in 2017.

The central bank is gradually loosening policy to adopt a more dovish stance on interest rates especially as its foreign reserves are rising, giving the West African country a buffer with which to defend the naira.