CBN intervenes with $10.31bn to defend Naira from losing value

The Central Bank of Nigeria (CBN) in the first half ended June 2020, injected a cumulative sum of $10.31 billion to cushion demand pressures and ensure exchange rate stability in the Foreign Exchange (FX) market.

This indicates a 21.7 percent increase from the $ 8.47billion in the corresponding period of 2019.

CBN disclosed this in its latest Financial Markets Department report for half-year 2020 (January – June), released on Wednesday

Since the introduction of the Investor and Exporter window, the CBN has increasingly intervened in the forex market as an active buyer and seller.

While providing insight on the intervention, CBN noted that the global COVID-19 lockdowns, adversely affected oil demand, and also contributed to the slowdown in economic activities.” In response, the Bank took deliberate efforts at sustaining price stability and preserving foreign reserve levels.”

Breakdown of the figures shows $5.06billion was sold at the Investors & Exporters Foreign Exchange (I & E) window, $1.19billion at the inter-bank spot, $570 million for SMEs, $312.00 million for invisibles, while forwards sales were $3.17billion.

On the other hand, the sum of US$5,425.30 million matured at the forwards segment, while US$2,504.62 million was outstanding at end-June 2020 .

In the futures market, the sum of US$14,332.53 million was traded, while US$10,832.64 million matured and US$13,167.65 million remained outstanding at end-June 2020.

At the Investors and Exporters window, the half-year activity report said, “The turnover of transactions at the window amounted to $24.69 billion at end of June 2020, compared to $33.21 billion in the corresponding period of 2019.

“The decrease in turnover as a result of reduced inflows to the country. Since its introduction in April 2017, the turnover of transactions amounted to $173.41 billion at end-June 2020.”

Meanwhile, on Wednesday, February 17th, Naira depreciated against the dollar to close at N478/$1 at the black market. While at the Investors & Exporters (I&E) window dollar was quoted at N410 compared to N409.67k quoted on the previous day.