Between February 21 and June 21, 2017, the Central Bank of Nigeria has pumped a total of $7.136bn into the interbank and Bureau De Change segment of the foreign exchange market, National Daily has gathered.
The dollar sales have been targeted at retail invisibles for PTA, BTA, school fees and medicals, wholesale forwards, SMEs, and Secondary Market Intervention Sales (SMIS).
The forays by the central bank in the past four months has helped in eliminating the pressure in the forex market, ensured exchange rate stability and eliminated currency speculators.
Owing to this measure, the naira which fell to a historic low of N525/$ 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.
While the country’s reserves has been on the decline since the intervention started, the CBN governor, Godwin 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.