34.1 C
Saturday, January 23, 2021
- Advertisement -

In Spite of Billions in Interventions, CBN Fails to Stop Naira’s Fall


2020: A Year Like no Other By Dakuku Peterside

The year 2020 was supposed to be a great year. It was another Leap Year – the famed Olympic Games year when...

The Time to Restructure is Now – Bola Tinubu

Being with you at this special event today, I am visited by two competing emotions. I continue to feel a profound sense...

Africa and the COVID-19 Vaccine – By Dakuku Peterside

The year 2020 will forever be synonymous with Covid-19, a pandemic that brought the world to her knees. For the first time...

Buhari is Repressing Human Rights and Getting Away With It – By Kolawole Olaniyan

President Muhammadu Buhari is failing to live up to his promises to ensure respect for human rights, obey the rule of law,...

Nigeria’s central bank has injected $23.35bn into the country’s foreign exchange market in the past six months in a failed bid to save the naira from crashing against the world’s major currencies.

The development, relative to the third quarter of 2019, reflecte, mainly, the decline in foreign exchange sales to the Bureau De Change, inter-bank, swaps transactions and wholesale forwards in the fourth quarter 2019.

The naira, which is not freely traded on currency markets has witnessed a precipitous fall in the past few months as global demand for crude oil, the West African country’s major foreign exchange earner fell to record lows as global demand ebbed as a result of the effects of the COVID-19 coronavirus pandemic.

Policy flip-flops and a lack of a clear monetary policy direction from President Muhammadu Buhari and the central bank governor Godwin Emefiele, have taken its toll on the nation’s currency, and attempts to manage pressure on the currency have been futile especially given Nigeria’s import dependency.

In a bid to maintain exchange stability, the Central Bank supplied foreign exchange totalling $23.35 billion to the markets, but this has not stopped the naira’s free fall. Data from parallel markets, a reliable indicator of the true value of the local currency show that the naira has fallen from $1 to 360 naira in April 2019 to $1 to 470 naira in 2020. This sum was sold exclusively to authorized dealers.

Of the $9.98bn foreign exchange supplied, sales to BDCs, Interbank, Swaps, Secondary Market Intervention Sales Intervention and Wholesale Forward Interventions fell by 11.2 per cent, 10.1 per cent, 8 per cent, 3.5 percent and 2.3 percent to $0.40bn, $1.65bn, $1.24bn, $0.31 and $3.34bn, respectively.

The apex bank’s forex sales to the Investors and Exporters window and Small and Medium Enterprises intervention in the fourth quarter, rose above their levels in the preceding quarter by 17.7 per cent and one percent to $2.62bn and $0.43bn, respectively.

During the fourth quarter, the average naira exchange rate to US dollar depreciated at the inter-bank, BDC segment, and the Investors and Exporters Window.

In the first quarter of 2020, a total of $13.37bn was sold by the CBN to authorised dealers This figure represents a 28.4 per cent increase, compared with the $9.98bn level recorded in the fourth quarter of 2019.

A breakdown of the $13.37 Q1 intervention showed, wholesale forwards intervention, interventions at the I & E window, sales to BDCs and SMIS rose by 77.2 per cent, 72.5 per cent, 12.9 per cent and 5.5 per cent to $2.08bn, $4.60bn, $3.76 bn and $1.68bn, respectively. Swap transactions, SME interventions and interbank sales fell by 36.4 per cent, 10.7 per cent and 3.4 per cent to $0.60bn, $0.36bn and $0.30bn, respectively.

- Advertisement -
- Advertisement -

Business Profiles

Ngozi Edozien

Ngozi Edozien is the founder and Managing Director of Invivo Partners Limited. She has over 20 years’ experience in finance/private equity, general...

Sanyade Okoli

Sanyade Okoli is Chief Executive Officer at Alpha African Advisory. She has over 21 years of financial advisory, private equity, corporate, commercial...

Samuel Nwanze

Samuel Nwanze is a director of Transcorp Power. He holds an MSc. degree in Finance and Management from Cranfield University in the...

Olukemi Adeniji

Ms Adeniji has a law degree and a Masters in International Law and Diplomacy (M.I.L.D) from the University of Lagos. She has...

Chikezie Nwosu

Chikezie Nwosu is an experienced senior executive with over 29 years local and international experience in the oil & gas industry vis-a-viz...