CBN Injects $2.63 trillion to defend naira

September 9, 2019
142 Views
https://nationaldailyng.com/wp-content/uploads/2019/03/966-Babe-320x100.gif

As part of its continued intervention in the foreign exchange market, the Central Bank of Nigeria (CBN) injected a cumulative sum of $2.63 billion to further sustain relative stability in the Foreign Exchange (FX) market.

According to the latest CBN’s monthly economic report covering the month of July 2019, Nigeria’s apex bank made available a whopping sum of $2.63 billion to authorised dealers in July, compared to US$2.50 billion supplied in the previous month. This indicates an increase of 5.2% above the level in the preceding month.

The breakdown of the Central Bank’s intervention in the FX market in the month of July 2019 shows that interbank sales rose by 1.9% to $0.08 billion, compared to the level in the preceding month.

Currency sales to the Bureau De Change (BDC) rose by 3.8% and estimated at US$1.08 billion. In essence, injection in BDC FX window scooped the biggest share.

The average exchange rate of the naira to the US-dollar, at the inter-bank segment, was N306.94/US$, representing a depreciation of 0.02%.  The average exchange rate at the BDC segment, at N359.43/US$, appreciating by 0.1% relative to the level at the end of the preceding month.

At the “Investors” and “Exporters” (I&E) window, the average exchange rate of the naira vis-à-vis the US dollar, was ₦361.26/US$, indicating that naira depreciated by 0.2%.

The higher sales of FX in the month of July must have been triggered by the high demand for FX at the BDC segment which recorded a 3.8% increase. Unlike the interbank segment, demand for FX is always on the rise at the BDC segment. This means that the Central Bank had to increase its supply of forex to ease pressure on the Nigerian Naira.

At the “Investors” and “Exporters” (I&E) window, the average exchange rate of the naira vis-à-vis the US dollar, at ₦361.26/US$, depreciated by 0.2% below the level in the preceding month.

Consequently, the premium between the exchange rates at the interbank and BDC segments narrowed by 0.2% point to 17.11% from 17.27% in June 2019. The premium between the BDC and I&E rates widened by 0.5% point.

A further look into the CBN report shows the gross external reserves stood at US$43.96 billion at the end of July 2019, indicating a decline of 1.8% ($790 million) below the US$44.75 billion recorded at end-June 2019.

According to the bank, the decrease was due, mainly, to increased foreign exchange market interventions and public sector payments.

Also, the external reserves position could finance 6 months of imports of goods and services, and 10.2 months of goods only, using the import figure for the first quarter of 2019.

Similarly, a breakdown of the external reserves by ownership showed that the share of Federation was $0.004 billion (0.01%) of the total; Federal Government, $7.62 billion (17.3%); and the CBN, $36.33 billion.

While the intervention will keep the naira stable for now, analysts are of the opinion that it is only a matter of time before the CBN will float the exchange rate in the face of falling oil price. The CBN governor had earlier disclosed that naira could only be considered to be floated if oil dropped to between $30 billion and $25 billion.

PV: 0

You may be interested

Farmers in Kaduna communities pay terrorists N400m to access farmlands – Community leader
News
News

Farmers in Kaduna communities pay terrorists N400m to access farmlands – Community leader

Webby - July 1, 2022

Alhaji Zubairu Abdulra’uf, a community leader from the Birnin Gwari Emirate Council in Birnin Gwari Local Government Area of Kaduna…

African Union Suspends Two Nigerians From Economic Council Over ‘Misconduct’
News
News

African Union Suspends Two Nigerians From Economic Council Over ‘Misconduct’

Webby - July 1, 2022

The African Union (AU) has suspended two Nigerians, Tunji Asaolu and John Oba, from the Economic, Social and Cultural Council…

Gunmen kill many, abduct several Chinese in Niger
News
News

Gunmen kill many, abduct several Chinese in Niger

Webby - July 1, 2022

At least four Chinese nationals have been abducted by bandits at a mining site located at Ajata Aboki village via…

Leave a Comment

Your email address will not be published.