CBN’s intervention in forex market hits $3.61bn in 3 months —FDC

With total foreign exchange supply in April at $1.2 billion, the Central Bank of Nigeria has supplied cumulative total of $3.61 billion from February to April 2017.

Managing Director/Chief Executive Officer Financial Derivatives Company Limited, Mr Bismarck Rewane  and the Lagos Business School (LBS) executive breakfast club who revealed this in their latest report, observed that the  interventions for the new forex window for investors & exporters is still trading at N374 – N380 per dollar.

Listing gains of thess interventions, the FDC noted that February/March 2017 was the period when the CBN’s aggressive intervention in the forex market forced a major appreciation in the Naira (13.5 per cent to N392) and has fed mildly into retail prices.

However, more significantly is the steep decline in the price of diesel from a peak of N260 to N195 at the wholesale level. Power also improved in the month with average output at the grid at 3773 megawatts (MW).

It further stated that the 90-day transmission lag effect of the CBN’s forex policy as well as manufacturer’s inventory cycle may have delayed some of the pass-through effect of raw material and finished goods cost reduction. The full impact of these policies it stated, will become manifest in the months of April and May.

Other experts, who spoke at  a foreign exchange  Seminar in Lagos, said accessibility to foreign exchange was no longer a challenge, but sustaining the ability to fund the market.

They said that the opening of Investors’ and Exporters’ (I&E) Window by the Central Bank had helped in building up confidence in the system, resulting in more offers than bids at the foreign exchange market.

Mrs Jumoke Olaniyan, the Associate Vice President, Market Development and Regulation, FMDQ OTC, said that the Nigerian foreign exchange market was halfway to getting a free float. Olaniyan attributed the likely free float to the I&E window that allowed the value of the naira to be determined by the forces of demand and supply.

Mr Dapo Olagunju, the Group Head, Global Markets in Access Bank, said there were more people at the I&E window who wanted to sell foreign exchange than those willing to buy.

Olagunju assured that the era of dollar scarcity might end soon, adding that the CBN’s capacity to sustain its interventions in the foreign exchange market would increase. He said that this was because the effect of the rising oil price and production output had begun to reflect on the revenue receipts of the government.