CBN injects $1.47bn into forex market in single month

The Central Bank of Nigeria (CBN) injected $1.47bn into the foreign exchange segment of the market as part of its efforts to stabilise the naira in January.

According to figures from the CBN’s January report on its foreign exchange market developments, this was a decrease of 47.4 per cent and 64.0 per cent from the level in the preceding month and corresponding period of 2020.

Part of the report read, “Total foreign exchange sales to authorised dealers by the bank was $1.47bn in January 2021, a decrease of 47.4 per cent and 64.0 per cent from the level in the preceding month and corresponding period of 2020, respectively.

“A disaggregation showed that foreign exchange sales at the I&E, SMIS, SME, and interbank fell by 79.9 per cent, 38.3 per cent, 19.8 per cent, and 37.3 per cent to $0.22bn, $0.48bn, $0.10bn, and $0.04bn respectively.

“Similarly, foreign exchange cash sales to BDC operators and matured swap transactions fell by 19.3 per cent and 48.7 per cent, compared with its level in the preceding month to $0.42bn and $0.12bn respectively in the review period.”

The report said in order to promote transparency and increase diaspora remittance inflows, the bank further updated and reiterated the modalities for the pay-out of diaspora remittances.

In a circular dated January 22, 2021, the bank said it emphasised that only licensed IMTOs were permitted to carry on the business of facilitating remittance transfers into Nigeria.

It added that all diaspora remittances must be received by beneficiaries in foreign currency cash or into their designated domiciliary accounts; and IMTOs were mandated to desist from allowing remittance pay-outs in naira.

The measures were meant to promote transparency in diaspora remittance transfers and thereby improve remittances inflows.

According to reports by members of the Monetary Policy Committee at the last meeting, the CBN continued to defend the naira in January and February.

It noted that naira exchange rate depreciated across the various windows including the I&E and BDC.

External reserves also declined from $36.6bn in December 2020 to $34.46bn in February 2021.

The committee stated that it was early to know the extent to which the new policy of CBN to boost remittances would impact on pressures in the foreign exchange market.

While capital imports had picked up in recent months, the MPC stated that it was still far below the level it was in January 2020.

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