The volume of currency trading in the Investors and Exporters’ (I&E) forex window had cumulatively hit heights of $2.2 billion since April 21, 2017, when it was introduced by the Central Bank of Nigeria (CBN) to boost liquidity in the forex market and ensure timely execution and settlement for eligible transactions.
The window gave portfolio investors a currency market they could access after two years of market-destroying FX illiquidity, according to Renaissance Capital. After a hesitant start, foreign inflows began to pick up, and the stock market reacted sharply, consequently.
Isaac Okorafor, acting director, corporate communications, CBN, expressed confidence that the interventions would continue to guarantee stability in the market and ensure availability to individuals and business concerns.
The naira is set to strengthen further against other foreign currencies in the forex market with CBN’s injection of another $418 million into various segments of the interbank foreign exchange market on Tuesday.
Figures obtained from the CBN on Tuesday indicated that the retail segment of the market received the highest intervention with a total of $226 million, followed by the wholesale window that received an allocation of $100 million. The Small and Medium Enterprises (SMEs) window received a boost of $50 million, while the invisibles segment, comprising Business/Personal Travel Allowances, school tuition, medicals, among others, was allocated $42 million to meet the demands of customers.
It wouldbe recalled that the CBN only on Monday, June 12, 2017, injected the sum of $413.5 million into the interbank market in its unrelenting bid to guarantee liquidity in the market as well as shore up the international value of the naira.
A breakdown of Monday’s figures shows that the apex Bank offered the sum of $100 million to authorised dealers in the wholesale window, while the Small and Medium Enterprises (SMEs) window was allocated a total of $28 million. The invisibles segment was allocated the sum of $25.5 million to meet the needs of customers in that sector.
Analysts see the increase in the volume of transactions in the Investors’ and Exporters’ (I&E) segment as a positive sign of the return of confidence in the financial markets as clearly demonstrated by the activities in the stock market.
According to them, the sentiments of investors had strengthened since the CBN established the I&E ForeX window in April, which they agreed had ensured greater flexibility in forex rate determination. They, however, urged the CBN to continue its march towards the convergence of rates.
Meanwhile, the naira remained stable with a high possibility of further strengthening in the forex market on Tuesday, June 13, 2017, exchanging at an average of N363/$1 in the BDC segment of the market.
At the black market, dollar exchanged at the rate of N367, the same level it traded on the previous day. The local currency gained N0.54k to close at N372.71k at the investors and exporters window on Tuesday.
However, naira weakened marginally at the inter-bank spot foreign exchange window where it traded at the rate of N305.70k per dollar from N305.65k quoted on Monday.
HOPE MOSES-ASHIKE
