Nigeria: CBN’s dollar flood inter-bank market, as Naira falls to 380

CBN pumps $150m into the market, but dealers were only able to buy $96m due to fall in dollar demand.

Dollar Flood (smwcentral)

There was an indication that the recent Central Bank of Nigeria’s dollars injection into the inter-bank market was not fully absorbed by commercial banks, due to fall in demand for dollars by players in this market.

This is the second time the apex bank’s intervention in the inter-bank was not fully subscribed by the commercial banks, the first was the $500 million CBN intervention on February 21, 2017 with only $371 million (74.4%) was taken by 23 commercial banks participating the market.

Commenting on the development, the Spokesman of the CBN, Mr. Isaac Okorafor, noted that authorized dealers in the market were only able to subscribe to the sum of $96.37 million (64.25%) of the $500 million interjection into the inter-bank market on Tuesday, April 25, 2017.

Mr. Okorafor, however, did not provide reasons for this but industry sources ascribed the situation to glut of forex in the financial system.

Mr. Godwin Emefiele, Governor, Central Bank of Nigeria. (The Nation)

In a related development, the Governor of Central Bank, Mr. Godwin Emefiele, pledged to sustain its forex invention program. This was disclosed to newsmen after a close-door briefing with the country’s Senate President, Dr. Bukola Saraki and some senators on its FX policies and interventions in the market on Tuesday, April 25, 2017.

“I think it’s an opportunity for me to say that we are going to continue this intervention because the reserves look very good. As I speak to you, our reserve stands at above $31 billion and that provides us enough firepower or ammunition to be able to defend the currency, and we will do so with all intensity to ensure that foreign exchange is procured by everybody.

Indeed, we have started to see a downward trend even in prices and you must have observed that inflation is also trending downwards.”

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