CBN spends $11.42bn in 7 months to defend Naira

THE Central Bank of Nigeria (CBN) has spent a total of $11.42 billion in ensuring exchange rate stability at the authorised currency windows between January and July 2022, a +6.23 per cent rise from $10.75 billion in the corresponding period of 2021.

This year’s substantial gains in the dollar have lessened the currency’s value, pulling the naira down to a record low at the parallel market.

The CBN spent $4.86 billion in the first quarter (Q1) 2022 and a lower amount of $4.81billion in Q2 2022.

The amount of forex sold for this period has been on a downtrend, monthly, -15.4 per cent decline to $1.750 billion in July from $2.07 billion in June.

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Reviewing the windows, records show that the interbank/invisible market and matured Swaps fell by -22.0 per cent and -59.1 per cent, respectively, in July, to $0.13 billion and $0.27 billion, below their respective levels in June. However, the Investors and Exporters (I&E), Secondary market Intervention Sales (SMIS), and Small and Medium Enterprises (SME) windows rose by 5.8 per cent, 0.6 per cent, and 65.7 per cent to $0.44 billion, $0.72 billion, and $0.19 billion in July.

It further showed that the CBN intervention has depleted the external reserves to $37.12 billion from $40 billion in 2021 despite ending forex sales to Bureaux De change in July 2021.

Analysts expect the forex sales for the remaining months to be higher as the naira’s depreciation worsened recently, with N444.62 at the NAFEX fixing and N445.30 at the I&E fixings as of November 30, 2022, compared to N418.45 and N419.50 as of June 30, 2022.