- as rates convergence remain a mirage
By Odunewu Segun
The Central Bank of Nigeria (CBN) has spent a whopping $9bn in the last nine months to stabilize the Naira against other international currencies, especially the Dollar, and also to enable stakeholders secure enough forex for their operations, and in the process boost naira’s stability, National Daily has learnt.
Before the introduction of the forex intervention in February 20, Naira’s exchange rate to the United States Dollar had climbed to over N500 to Dollar. The gap had since reduced to N359
The CBN’s Deputy Governor, Financial System Stability, Joseph Nnanna, said the introduction of the Investors’ & Exporters’ (I&E) Forex Window was targeted at increasing forex supply; and allowing the timely settlement of transactions helped to achieve the current exchange rate.
He said over $10 billion has been attracted to the economy through the I&E Forex window, adding that the window’s success rate exceeded stakeholders’ expectations.
Meanwhile, at the weekend, the CBN injected $287.89 million into the Retail Secondary Market Intervention Sales (SMIS).The intervention was in continuation of its resolve to guarantee liquidity in the foreign exchange market.
Data received from the CBN revealed that the figure was in favour of the agricultural, airlines, petroleum products and raw materials and machinery sectors.
The bank’s Acting Director, Corporate Communications Department, Isaac Okorafor, confirmed the figures, noting that the releases were targeted at sustaining liquidity in the market as well as boosting production and trade.
He reiterated that the bank remained committed to ensuring liquidity in the inter-bank sector of the market and would continue to intervene in order to drive growth in the economy and guarantee stability in the market.
With Friday’s rates hovering around N359 and N360/$1,. Okorafor, was upbeat that the bank’s forex intervention had effectively checked speculations around the Naira. He, however, disclosed that the bank would continue to ensure enforcement through utilisation report and market intelligence.
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It will be recalled that the CBN had last Monday, also intervened in the inter-bank Foreign Exchange Market to the tune of $210 million comprising of $100 million for the wholesale segment and $55 million each for the Small and Medium Enterprises (SMEs) and invisibles segment.
Although the naira maintained its steady rate against major currencies around the globe, exchanging for N360/$1 in the BDC segment of the market on Friday, there is growing anticipation that the objective of the CBN to achieve rates convergence might be met before the end of December 2017 through a combination of factors such as Diaspora repatriation of funds and continued accretion to the country’s reserves.
Market sources said the naira’s stability will continue in the coming months due to the CBN’s increased dollar sale to BDCs, the intervention for SMEs and favorable forex policy for investors, exporters and end-users.