By Anayo Ezugwu
TO cushion the demand pressure and ensure exchange rate stability in 2018, the Central Bank Nigeria, CBN, injected $36,731.29 billion to maintain its direct intervention in the inter-bank foreign exchange market. The total spot sale sold within the period was $25,676.77 million, while forwards sales amounted to $11,054.52 million.
The CBN in its Financial Markets Department Annual Activity Report 2018 published on its website stated that the spot sales comprised $3,453.09 million at the inter-bank, $1,581.40 million for invisibles, $1,315.50 million for SMEs and $8,272.26 million at the Investors’ and Exporters’, I & E. On the other hand, the bank purchased $7,802.77 million at the inter-bank market.
It stated that the net sales by the bank amounted to $17,874.00 million. The sum of $10,400.43 million matured at the forwards segment, while $2,760.51 million remained outstanding at the end of December 2018. The report noted that in the preceding year, total sales were $15,816.06 million, comprising $4,617.12 million as spot and $11,198.94 million as forward transactions.
In the same vein, the bank purchased $6,090.30 million, resulting in a net sale of $9,725.76 million. The sum of $10,731.27 million matured at the forwards, while $1,921.00 million remained outstanding at the end of December 2017.
The report attributed the increase in volume of transactions in 2018 to the bank’s foreign exchange policy and its management, coupled with the improvement in the levels of foreign reserves during the year. “The stability in the Foreign Exchange Market recorded by the Bank in 2017 was sustained in the review period.
“This was due to the positive gains arising from the implementation of the various policies adopted by the bank in line with its flexible exchange rate regime. These measures included the creation of special windows such as, the Investors’ and Exporters’ (I & E), SMEs, SMIS, payment of port charges by oil companies and invisibles, among others. In addition, the CBN continued to participate at the Naira Settled OTC Futures market and increased the volume and frequency of sale of foreign exchange to BDCs
“At the end of December 2018, a total of $7,877.15 million was traded at the futures market, $6,423.67 million matured, while $4,772.35 million remained outstanding. At the end of December 2017, $5,487.24 million was traded, $5,823.55 million matured, while $3,318.87 million was outstanding. The increase in the level of activities at the futures market was due to improved confidence in the economy as investors’ perception about future exchange rates remained optimistic,” it said.
According to the report, the exchange rate at the inter-bank market remained relatively stable in 2018 due to the improved liquidity in the market. It noted that at the inter-bank segment, the rate opened at ₦306.00/US$ on January 2, 2018 and closed at ₦307.00/US$ at the end of December 2018.
The report said the monthly average exchange rate opened at ₦305.78/US$ in January, marginally appreciated to ₦305.61/US$ in April and depreciated to ₦306.92/US$ in December, 2018. While in 2017, the rate opened at ₦305.00/US$ in January and closed at₦306.00/US$ at the end of December 2017. The monthly average exchange rate opened at ₦305.20/US$ in January, depreciated to ₦306.40/US$ in March and appreciated to ₦305.71/US$ in June. However, the rate depreciated to ₦305.89/US$ and ₦306.31/US$ in September and December, respectively.
On the Bureaux de-Change segment, the report stated that the direct sale of foreign exchange to BDC’s continued in 2018. However, the bank increased the volume and frequency of its weekly sales to three times per week in May and subsequently to four times per week in November.
This was to manage the demand pressure which emerged due to capital flight as the market reacted to normalisation of rates by the United States of America Federal Reserve, dwindling crude oil price levels and ensure exchange rate stability. Consequently, total sales to a BDC per week stood at US$75,000.
The rate at the BDC segment opened at ₦363.00/US$ on January 2, 2018 and closed at ₦361.00/US$ at the end of December 2018, having traded as high as ₦367.50/US$ on December 3, 2018. The monthly average rate opened at ₦363.20/US$ in January and closed at ₦363.46/US$ in December 2018.
In the preceding year, the rate opened at ₦490.00/US$ on January 3, 2017 and closed at ₦363.00/US$ at the end of December 2017, trading as high as ₦515.00/US$ on February 20, 2017. The monthly average rate opened at ₦493.29/US$ in January and closed at₦362.83/US$ in December 2017.
– May 17, 2019 @ 16:37 GMT |