Tuesday, January 29,2019
In its bid to ensure continued exchange rate stability, especially during this election season, the Central Bank of Nigeria (CBN) injected over $1.48 billion into the foreign exchange market in the last three weeks, findings by New Telegraph show.
The inflow came in the form of the bank’s interventions in the interbank forex market as well as its weekly forex sales to Bureaux De Change (BDCs) operators in the country. Specifically, data obtained by New Telegraph indicate that the CBN pumped a total of $1.18 billion into the interbank forex market during the period and also sold $300 million to about 4,000 BDCs ($75,000 per BDC). This means that it has so far injected a combined total of $1.48 billion into the forex market this month.
A breakdown of CBN’s dollar injections into the forex market during this period show that the regulator carried out its first intervention of 2019 on January 4 by pumping $210 million into the interbank forex market. It also injected another $210 million into the forex market on January 8. On January 11, the regulator injected the sum of $263 million into the Retail Secondary Market Intervention Sales (SMIS), being its first intervention in that sector this year.
The CBN pumped in a fresh $210 million into the interbank forex market on January 15 while last Friday, January 25, it injected $289.76 million into the Retail SMIS. On forex sales to BDCs during the period, New Telegraph’s investigations indicate that while the number of licensed BDCs in the country stood at 4,345 as at the end of September 2018, an average of 4,000 of the firms actively participate in the CBN’s weekly forex sales to the money changers.
Until December last year when the CBN introduced a special forex sale of $15,000 per BDC every Thursday due to what it said was increased forex demand during the Christmas and New Year festivities, each BDC was entitled to purchase $20,000 from the regulator on Mondays, Wednesdays and Fridays.
This means that with the new special Thursday sale, each BDC has been buying a total of $75,000 per week from the CBN since last month. A Lagos-based BDC operator, who did not want to be named, told New Telegraph that there was speculation in the sub sector that the special forex sale by the CBN on Thursdays was likely to continue until after next month’s elections.
The operator said: “Although the CBN originally said the special Thursday sales was for increased forex demand during the Yuletide, it has not stopped selling the $15,000 to BDCs. In fact, we are hearing that this will continue until after the elections.” According to the operator, the increased forex intervention by the CBN has been key to exchange rate stability during this election season.
“Many people thought there would be exchange rate volatility during this election season. Despite all the dollars we heard some of the politicians deployed to secure their nomination tickets, the naira has remained stable against the dollar,” the operator said.