The central Bank of Nigeria (CBN) Set To Defend Naira In Three Months With $4.37bn

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The Central Bank of Nigeria (CBN) plans to inject $4.37bn into the foreign exchange market in the third quarter of 2021, as part of its plan to maintain the stability of the Nigerian currency.

Reports from ccnworldtech elucidate more on this situation. According to ccnworldtech findings, CBN, revealed  this in its third quarter economic survey that its periodic forex market interventions would continue to increase the delivery side of the market as the COVID-19 downturn decreased the supply chain market segment in the private industry.

“The statement partly read, “Total foreign exchange sales to authorized dealers by the bank amounted to $ 4.37bn during the third quarter of 2020, a decrease of 2.3% from the level in the previous quarter.

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“The decline in wholesale forward intervention and interbank sales was widely attributed to this. Compared with the corresponding quarter of 2019, total foreign exchange sales were down at 56.4%.

”More of the segmentation reveals that mature swap transactions and SMIS intervention rose from the levels in the former quarter by 50.80% and 0.7% to $1.24 billion and $1.96billion”, respectively, it added.

Interbank sales, I&E interventions, and SME, however, decreased by 22.3 percent, 18.7 percent, and 3.5 percent to $0.15 billion, $0.39 billion, and $0.30 billion comparable to their levels in the previous quarter.

The study further shows that in the review period, foreign exchange cash sales to Bureau de Change operators were $0.33bn.

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In order to increase liquidity and ease demand pressure, the CBN said it maintained interventions in the forex market and resumed forex cash sales to the BDC operators.

It confirmed that the rate of exchange of the naira against the dollar will be further adjusted from N361/$ to N381/$ during the review period.

It also said it has introduced steps to reduce abuses and ensure that forex is used prudently.

The banking authority said it directed all authorized dealers to withdraw payments redirected through third parties from opening Forms M.

The objective of this policy was to eliminate incidents of over-invoicing, transfer pricing, double handling fees and unnecessary costs which were eventually passed on to Nigerian consumers.

The CBN asserted that, for inquiry, the Deposit Money Banks were instructed to disable the home accounts of some firms involves in forex abuses.

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