CBN injects $5.62bn into forex market to shore up naira

19 Mar CBN injects $5.62bn into forex market to shore up naira

The Central Bank of Nigeria (CBN) injected $5.62bn into the foreign exchange market in the fourth quarter of 2020 as part of efforts to ensure the stability of the naira.

In its report on ‘Transactions in the foreign exchange market’ in fourth quarter of 2020, it noted that the injection was an increase of N1.25bn from $4.37bn intervention in the economy by the banking regulator in the third quarter.

Part of the report read, “The bank maintained its periodic interventions in the foreign exchange market to boost liquidity, enhance access to foreign exchange, curb unbridled demand and ensure stable exchange rate.

“During the fourth quarter of 2020, total foreign exchange sales to authorised dealers by the bank stood at $5.62bn, an increase of 28.7 per cent above the level in the preceding quarter.

“This was attributed, largely, to the increased interventions in the BDC and I&E windows during the quarter.”

The total foreign exchange sales, however, saw a decrease of 46.1 per cent below the level in the corresponding quarter of 2019, the CBN stated.

Further disaggregation showed that the BDC sales and I&E sales rose to $1.36bn and $1.62bn from $0.34bn and $0.39bn respectively in the preceding quarter.

It added that interbank sales and SME intervention increased by 12.2 per cent and 3.1 per cent to $0.16bn and $0.31bn respectively, from the levels in the preceding quarter.

The Secondary Market Intervention Sales and matured swap transactions, however, fell by 12.8 per cent and 62.9 per cent to $1.71bn and $0.46bn, relative to the levels in the preceding quarter.

According to the CBN, foreign exchange inflow into the economy improved, following the bank’s policy directive of November 30, 2020.