CENTRAL
Bank of Nigeria (CBN) has revealed how it arrested the freefall of the naira
when it appeared that all was lost early in 2017 with the currency dropping to
as low as 500 units to the United States dollar in February.
Director,
Monetary Policy Department of the bank, Mr Moses Tule said at a seminar for
finance correspondents and business editors in Awka, Anambra State that the
bank provided official sources of funding for foreign exchange users and
removed room for speculation.
Naira,
which exchanged for over N500/USD in February is presently hovering around
N360/US$.
According
to him, “to boost liquidity, accommodate all forex obligations, and deepen
foreign exchange market, CBN made provision for funding of invisible
transactions for a fair and veritable exchange rate;
“Intervention
in various sectors of the market through forward sales of tenors; sale of
$20,000 foreign exchange to bureau-de-change twice weekly”.
In
addition, the bank also approved payment of $20,000 per quarter as payment for
small scale importation and established investors and exporters’ window for
them to meet their invisibles obligations, bills for collection and other trade
related activities.
As a
result, the apex bank was able to defray all its outstanding forex demand of
$4.14 billion as at June 2016 while front loading forex demand and inventory
disappeared.
The
declaration of scores of items as ineligible for import finance through CBN
sourced forex ensured “import substitution and export switching with positive
effects on domestic production”, he disclosed.
Some
calculations suggested that through the interventions, the bank sold $9 billion
to forex dealers through the interbank market between February and August 2017.
Before
commencements of the interventions last February, Nigeria’s external reserve
had dropped to $28bn and the CBN couldn’t meet most of the forex demands
including repatriation of funds by the airlines.
In the
seven months, CBN had intervened in the forex market to the tune of
$8,908,860,000 in all segments of the market, which saw the naira appreciating
from N520/$1 to N365 to the dollar at the parallel market.
Despite
these interventions however, the country’s external reserves grew from $28.7
billion to $33 billion as at last week Thursday.
Acting
Director of Corporate Communications at the CBN, Mr Isaac Okorofor made the
disclosure amidst rising oil prices at the international market.
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