By Abiola Olawale (The New Diplomat’s Southwest Bureau)
The Central Bank of Nigeria on Thursday disclosed that $5.62bn (N2.24bn) was injected into the foreign exchange market in the fourth quarter of 2020, in a bid stabilize the fluctuating status of the naira.
The apex bank disclosed this in its report which was titled “Transaction in the Foreign Exchange Market”.
Financially experts projected that at an exchange rate of N400 to a dollar, the funds injected into the foreign exchange market might statistically equate to about N2.24 trillion.
The report indicated that there was an increase of $1.25bn from $4.37bn intervention in the economy by the banking regulator in the third quarter of 2020.
The CBN disclosed in the report that the intervention funds was necessary to boost the status of Naira at the foreign market, in a bid to cushion the negative impact of the COVID-19 pandemic.
According to the apex bank, the directive to release intervention funds to stabilize the exchange rate was issued on November 30, 2020, adding that the country’s economy improved following the intervention.
In addition, the re-opening of the air and land borders and the return to normalcy of economic activities boosted foreign exchange utilisation during the period in review.
The report partly reads, “The bank maintained its periodic interventions in the foreign exchange market to boost liquidity, enhance access to foreign exchange, curb unbridled demand and ensure stable exchange rate. During the fourth quarter of 2020, total foreign exchange sales to authorised dealers by the bank stood at $5.62bn, an increase of 28.7 per cent above the level in the preceding quarter. This was attributed, largely, to the increased interventions in the BDC and I&E windows during the quarter. The total foreign exchange sales, however, saw a decrease of 46.1 per cent below the level in the corresponding quarter of 2019.”
Further disaggregation showed that the Bureau De Change (BDC) sales and Import and Export (I&E) sales rose to $1.36bn and $1.62bn from $0.34bn and $0.39bn respectively in the third quarter of 2020.
The report also indicated that that interbank sales and Small to Medium Enterprise (SME) intervention funds increased by 12.2 per cent and 3.1 per cent to $0.16bn and $0.31bn respectively, from the levels in the third quarter of 2020.
It would be recalled that the apex bank had directed that all transfer of all diaspora remittances should be made to the domiciliary accounts of the beneficiaries or payment of customers in foreign currency.
Similarly, the apex bank ordered the closure of all Naira ledger accounts opened specifically for the purpose of receiving IMTO (foreign transfers from diaspora Nigerians) with immediate effect.