Nigeria’s central bank injects $9bn into currency market in H1 as part of forex strategy

The Central Bank of Nigeria (CBN) sold a total of $9.5 billion to end users in the foreign exchange market during  the first half of 2018. The figure showed an increase of over $1.4 billion when compared to the $8.1 billion sold during the corresponding period in 2017.

According to the 2018 half year activity report released by the apex bank Wednesday,  the increased transactions in 2018 were attributable to the bank’s foreign exchange management strategy of sustaining liquidity in the market and maintaining exchange rate stability.

A breakdown of the foreign exchange transactions shows that US$1,546.43 million was sold at the inter-bank spot, US$768.70 million went to invisibles, and $637.00 million was for SMEs, US$1,236.69 million at the I & E window, while forwards sales were $5,311.09 million.

The apex bank said it purchased US$6,436.47 million at the inter-bank market which resulted in a net sale of US$3,063.44 million by the Bank. The bank further explained that the sum of US$5,681.76 million matured at the forwards segment, while US$1,469.04 million was outstanding at end June 2018.

The foreign exchange market remained stable in the first half of 2018, traceable to the sustained salutary effects of the CBN foreign exchange policy measures adopted since June 2016. Some of these measures included moral suasion, as well as reduced selling rate, increased volume and frequency of foreign exchange sales to BDCs.

The encouraging seamless operations of the foreign market was also due to the stable price of crude oil at the international market which impacted positively on the foreign exchange earnings and accretion to reserves. The various measures hitherto adopted by the Bank to manage the continued demand pressures and address supply shortfalls in the foreign exchange market were sustained.

These included foreign exchange intervention in critical sectors: manufacturing, raw materials and machinery, agriculture, airline and petroleum as well as sales for invisible transactions.