In line with its efforts to boost dollar liquidity and bolster the naira, the Central Bank of Nigeria (CBN) yesterday released additional $250 million for 7 to 30 day forwards for agriculture, airline, petroleum products and raw materials.
The banking watchdog also called for bids for wholesale spot for $100 million for basic/personal travelling Allowance, medicals and tuition fees. CBN’s Acting Director, Corporate Communications, Mr. Isaac Okorafor, confirmed the bank’s directive yesterday.
He said the lender has commenced heavy injections into the spot market in addition to the settlement of requests for wholesale spot bids for in-visibles such as school fees, medicals and personal travel allowance. According to Reuters, the CBN has also said it will open a special forex window for foreign investors to trade freely and repatriate dividends.
The news agency quoted the regulator as saying: “The (CBN) will soon … open a special window for investors to trade freely … dividends and investment remittances.” The announcement comes as the naira’s struggles on the parallel market became more pronounced.
The local currency closed trading yesterday at N410 per dollar on the market appreciating marginally from N411/$1 the previous day, while on the spot market, it closed at N306.10 to the greenback on the spot market, boosted by CBN dollar sales.
The apex bank has been using the forward market to meet demand for dollars, by intervening with tiny volumes on the spot market and using those sales to influence the naira’s official value. However, this strategy has not effectively addressed the forex scarcity in the system as foreign investors have failed to bring in critical inflows.
Last Monday, the CBN said it planned to sell shorterdated dollar forwards to inject liquidity into the official market and support the naira, selling $100 million on Tuesday on such contracts. Also on Monday, the banking watchdog announced that it was opening a special forex window for Small and Medium scale Enterprises (SMEs). It stated that the initiative would enable small businesses import eligible finished and semi-finished items not exceeding $20,000 for each operator per quarter.
In addition, in order to reduce the pressure on the naira on the parallel market, the CBN for the second week in a row made a special sale of $20,000 to each of the licensed Bureaux De Change (BDCs) in the country. According to BDC operators, the $20,000 was delivered in two tranches of $10,000 that they received on Monday and Wednesday.
