By KAYODE TOKEDE.
The Central Bank of Nigeria (CBN) in two months has defended the Naira with an injection of about $2.47 billion into the foreign exchange market.
The move by CBN is to reduce speculative trading at the parallel market and support key sector of the nation’s economy.
The Naira defend has come on the heels of growth in foreign reserves amid steady growth in global oil prices and increased inflow from federal government Eurobond borrowings.
Foreign reserves on the apex bank official website hits $41.8 billion as at February 21, 2018 while the daily basket Price of Organization of Petroleum Exporting Countries (OPEC) closed last week at $63.08 a barrel.
According to findings, the apex bank defend the Naira with accumulated sum of $1.4 billion in January and in February, an accumulated sum of $1.07 billion was injected into the foreign exchange market.
The first injection into the interbank foreign exchange market this year was $210 million.
The breakdown of the figure indicated that the CBN offered $100million to the Wholesale sector while the Small and Medium Enterprises (SMEs) and invisibles windows each received $55 million on January 8, 2018.
In its first Retail Secondary Market Intervention Sales (SMIS) for the year, the CBN intervened in the inter-bank Foreign Exchange Market with the total sum of $262.5 million the following week.
However, in its third and fourth interventions, the sum of $210million was injected into the inter-bank foreign exchange market twice, to meet customers’ requests in various segments of the market in January.
Consequently, the CBN intervened in the SMIS of the inter-bank Foreign Exchange Market to the tune of $304.4 million and finally injected another sum of $210 million into various segments of the inter-bank market towards the end of January.
In the following month, February, the first intervention by CBN was $210million and another $210 on February 12.
The last two SMIS, in February 2018, was $325.64 million and $321.4 million in the inter-bank Foreign Exchange Market.
The naira strengthened against the dollar by 0.28 per cent and 0.06per cent to N362 and N360.08 in the parallel market and Investors &Exporter Foreign Exchange (I & E) FX window respectively.
Total turnover in the I&E FX window increased by 15.7 per cent w/w to $913.57 million from $789.9 million in prior week, with the bulk of trades consummated within the range of N360-N369.
Analysts at Cordros Capital explained that the steady accretion to the foreign reserves, amidst stable oil prices and production, will continue to support the apex bank’s interventions in the currency space, hence the stability of the naira.
Also, Research Analyst at Pan Africa Capitals Plc, the Investment Banking arm of Pan African Capital Group, Mr. Moses Ojo in its latest Economic outlook said, the availability of foreign exchange is expected to improve during the year as the level of accretion to foreign reserves is growing on the back of recovery in the prices of crude oil and production and increasing inflow from foreign borrowings by the federal government.
He noted that the official and the parallel market exchange rate are expected to converge mildly in the course of the year, Naira is projected to strengthen to between N330 and N340/ Dollar in the parallel market while the official exchange rate remains at between N306 to N307/Dollar.
“Furthermore, flexible exchange rates in favour of some selected sectors of the economy and for various reasons are expected to persist, and administrative measures introduced by the CBN to ensure liquidity of foreign exchange are expected to continue in 2018,” he explained.
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