By Adedapo Adesanya
The total amount injected into the foreign exchange (FX) market by the Central Bank of Nigeria (CBN) declined by 2.3 per cent in the third quarter of 2020 to $4.37 billion.
The amount was pumped into the market as part of efforts to ensure the stability of the nation’s currency, which witnessed more than one devaluation last year.
According to the third-quarter economic report released by the apex bank recently, the forex market came under pressure as the COVID-19 crisis weakened the private sector supply chain segment of the market. However, it noted that through its periodic interventions, it continued to boost the supply side of the market.
“During the third quarter of 2020, total foreign exchange sales to authorised dealers by the bank amounted to $4.37 billion, a decline of 2.3 per cent from the level in the preceding quarter.
“This was attributed largely to the decrease in wholesale forward intervention and interbank sales.
“The total foreign exchange sales represented a decrease of 56.4 per cent, compared with the corresponding quarter of 2019.
“Further disaggregation showed that matured swap transactions and SMIS intervention rose by 50.8 per cent and 0.7 per cent to $1.24 billion and $1.96 billion, from the levels in the preceding quarter.
“However, interbank sales, interventions at the I&E window, and SMEs fell by 22.3 per cent, 18.7 per cent and 3.5 per cent to $0.15 billion, $0.39 billion and $0.30 billion relatives to their levels in the preceding quarter,” the report read in part.
The bank, in the report, stated that the foreign exchange cash sales to Bureau de Change (BDC) operators stood at $330 million in the review period.
It noted that it has sustained interventions in the forex market and resumed forex cash sales to the BDC operators to boost liquidity and ease demand pressure.
According to the CBN, the exchange rate of the Naira against the dollar was further adjusted during the review period from N361/$ to N381/$ in July 2020.
The central bank also claimed that it as well introduced measures to curb abuses and ensure that there was an adequate and proper use of forex
The CBN added that it directed all authorised dealers to desist from opening Forms M with payments routed through third parties with the aim at eliminating occurrences of over-invoicing, transfer pricing, double handling charges, and avoidable costs, which were ultimately passed on to Nigerian consumers.
The banking authority also stated that the Deposit Money Banks (DMBs) were directed to block domiciliary accounts of some companies involved in forex abuses for investigation.
