Posted by By Ayodele Aminu on
In its bid to assist the private sector grow the economy, the Central Bank of Nigeria (CBN) yesterday intervened again in the foreign exchange market by offering $200 million for the fourth time in seven weeks.
In its bid to assist the private sector grow the economy, the Central Bank of Nigeria (CBN) yesterday intervened again in the foreign exchange market by offering $200 million for the fourth time in seven weeks.
The injection of the CBN forex led to 15 kobo appreciation of the naira at the inter-bank market, where it closed at N130.85 as against N131, which had earlier ruled the market. The intervention however, failed to have any impact on the official exchange rate of the naira as it remained stable at N130.50 per dollar at the close of business yesterday. Market operators attributed the development to inflow of about $76 million last week from the oil majors. Addax Petroleum was also said to have sold $4 million to a select number of banks yesterday.
The CBN circular informing banks of its intention to sell $200 million yesterday at its special auction reads in part:" The CBN hereby offers the amount of $200 million for sale at the foreign exchange market on Tuesday October 4, 2005. This special auction is meant to assist the private sector in the efforts of growing the economy."
The circular dated October 4, 2005 and signed by CBN's Director, Trade and Exchange Department, Mrs. Omolara Akanji advised authorized dealers to 'submit bids on their own account to the CBN Lagos."
Titled 'Foreign Exchange Market Special Auction No 4," the circular with reference number TED/AD/115/2005 reminded authorized dealers 'that their current account with the CBN must be adequately funded on the day of bidding and should remain funded at the time of disbursement, failing which the bids will be disqualified."
Besides, the circular advised authorized dealers 'to know that under the special auction a holding period of 10 business days are allowed for the funds to be utilized. Also the funds purchased are transferable."
The special auction, which has since been running alongside the bi-weekly Dutch Auction System (DAS), is meant to stem the rising tide of inflation, stabilize the foreign exchange market and meet the CBN's monetary policy target.
THISDAY had exclusively reported the intervention of the CBN in the forex market with $500 million on August 23, 2005, a development that led to N2.50 appreciation of the naira from N137.50 per dollar to N135 at the inter-bank market.