Analysts at FSDH Merchant Bank have said that the frequent injections of dollars into the foreign exchange market has improved businesses and consumers’ confidence in the economy.
The CBN, in its bid to ensure forex stability and narrow the gap between the official and parallel market exchange rates of the naira to the dollar, has regularly injected dollars into the forex market since last February.
On Monday, it offered a total of $195million in three segments of the market, auctioning $100million in the wholesale segment of the inter-bank foreign exchange market, $50million and $45million in the Small and Medium Enterprises (SMEs) and invisible segments respectively.
The experts cited the latest Purchasing Managers’ Index (PMI) report that the CBN published for the month of July 2017, which shows, “The Nigerian economy is gathering more momentum for a turnaround”, a development, they attributed mainly to the apex bank’s’s strategy of boosting forex.
The analysts stated: “The PMI report shows that the Composite Manufacturing Index (CMI) expanded for the fourth consecutive month in the year 2017 to attain the highest level since July 2014.
“The CMI accelerated to 54.1 points in July 2017 from 52.9 points in June 2017. The Composite Non-Manufacturing Index (CNMI) also expanded to 54.4 points in July 2017 from 54.2 points in June 2017 to attain the highest level since December 2014.”
“We believe that manufacturing and non-manufacturing activities in the country have increased in the last few months largely because of the CBN’s strategy to increase the supply of foreign exchange.
Significantly, the analysts also pointed out that the implementation of the Investors’ and Exporters’ Foreign Exchange (I&E) window has attracted foreign investors to the economy.
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“About 57per cent of the total foreign capital inflows into the Nigerian economy between January and May 2017 was recorded in April 2017 and May 2017 following the commencement of the I&E window on April 24, 2017,” they stated.
Besides, the experts noted: “The capital importation data from the CBN as at May 2017 shows that foreign investors have increased their investments in the Nigerian economy; thus increasing the supply of foreign exchange into the country.
The total capital imported into the Nigerian economy between January 2017 and May 2017 stood at $2.09billion, an increase of 82.78per cent over the amount of $1.14billion recorded in the corresponding period of 2016.”
Acting Director, Corporate Communications Department, Mr. Isaac Okorafor, reaffirmed the bank’s commitment to sustaining liquidity in the market with a view to ensuring genuine forex request are met as well as improving liquidity in the market.
He stated that the leadership of the CBN was upbeat with the positive impact its current foreign exchange management is having on the manufacturing sector, agriculture and economic activities across the country.