Forex demand shrinks as dealers fail to absorb Central Bank’s $150 million offer

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Foreign exchange dealers were unable to absorb fully the $150 million offered by the Central Bank of Nigeria, CBN on Monday, as intervention in the new Investors’/exporters’ FX window commenced with the sale of $25 million to customers.

Central bank of Nigeria
Central bank of Nigeria

On Monday, the Central Bank supplied a total of $150 million to the interbank wholesale market for auction to authorised foreign exchange dealers.

But, the dealers were unable to subscribe fully to the offer, CBN spokesperson, Isaac Okorafor, said on Tuesday.

Mr. Okorafor said the dealers were only able to subscribe to about $96.37 million. He did not give reasons for the inability of the dealers to fully subscribe to the offer in the inter-bank market.

A review of the market performance on Tuesday in some major cities, including Lagos, Abuja and Kano, revealed sustained positive performance of the Naira, with the value of the national currency at about N379 to dollar.

Meanwhile, the Central Bank sold a total of $25 million in the new forex market window created last week to boost liquidity for investors and exporters of goods and services as well as ensure timely execution and settlement for eligible transactions.

Mr. Okorafor said transactions under the new window include loan repayments, loan interest payments, dividends/income remittances, capital repatriation, management service fees, consultancy fees, and software subscription fees.

Others include technology transfer agreements, personal home remittances and any other eligible transactions, including ‘miscellaneous payments’ as detailed under Memorandum 15 of the CBN foreign exchange manual. It, however, excludes international airlines ticket sales’ remittances.

On the role of the apex bank in the market, Mr. Okorafor said the CBN would be a market participant at the window to promote liquidity and professional market conduct.

Meanwhile, interventions of the CBN in the investors’ and exporters’ forex window appear to have impacted positively on the Nigerian stock market with stocks recording spikes.

Market watchers believe the new CBN window for investors and exporters would boost production with its attendant net effect on employment.

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