The Central Bank of Nigeria injected over $10.97bn into the foreign exchange market between January and October this year to defend the nation’s currency, the naira, against other major currencies, including the United States dollar.
The $10.97bn was arrived at by our correspondent based on weekly compilation of amount released by the apex bank to boost liquidity in the foreign exchange market.
The CBN usually intervenes in the foreign exchange market by injecting liquidity about three times a week.
The intervention is provided to authorised dealers in the wholesale segment of the market as well as other sectors of the economy such as agriculture, manufacturing and the Small and Medium Enterprise segment.
Customers that required foreign exchange for invisible things such as tuition fees, medical bills and Basic Travel Allowance are also allocated funds from the intervention.
An analysis of the weekly intervention shows that the apex bank injected about $1.2bn in January while February, March and April had $1.49bn, $1.38bn and $1.03bn, respectively.
The CBN’s intervention in the month of May was estimated at about $1.06bn; June, $1.29bn, while July had $970m.
For the month of August, about $957m was injected into the foreign exchange market to defend the naira while September and October had about $1.04bn and $547m, respectively.
In addition, figures from the bank showed that since the commencement of the currency swap agreement in July this year, over 295.98m Chinese yuan, had been injected into the foreign exchange market.
An analysis of the 295.98m Chinese yuan shows that Y69.8m was injected into the forex market in July for operators in the agriculture and raw materials sectors of the economy.
In August, an intervention of Y69m was made into the forex market while Y104.98m was released in the month of September. October had a total injection of Y53m in the foreign exchange market.
Commenting on the impact of the apex bank’s intervention in stabilising the foreign exchange market, the Director, Corporate Communications Department of CBN, Mr Isaac Okorafor, said the availability of the dollar and the Renminbi had reduced the pressure on the Nigerian foreign exchange market.
He told SUNDAY PUNCH in a telephone interview that the relative stability in the foreign exchange market could be attributed largely to the continued intervention of the CBN.
The CBN spokesman added that the apex bank remained committed to ensuring that all the sectors continued to enjoy access to the foreign exchange required for the business concerns, whether the amount required US dollars or Chinese yuan.
He said the apex bank would continue to come up with measures that would ensure the value of the naira appreciated in the foreign exchange market.
Okorafor said, “The Importers and Exporters window was formed basically to sustain that market. We also have the International Money Transfer Operators. The currency swap has helped to stabilise the market.”
He said the apex bank would sustain its intervention in the foreign exchange market until there was enough liquidity in the market.