Further to the moves to normalise the foreign exchange (FX) market, the Central Bank of Nigeria (CBN) has injected additional $350 million into the market this weekend.
This will make the funds supply to the market a total to $570 million and may further boost the value of the naira. At the parallel market, the dollar was valued between N450-N460. The to $570 million include $80 million for Personal Travel Allowance (PTA), medicals and school fees, $100 million in wholesale forwards, an additional another $350 million planned for injection this weekend.
This is a rude shock to traders who have suffered loss in the last two weeks due to the CBN intervention strategy to make the scarce currency available for market players.
The Acting Director, Corporate Communications, Isaac Okorafor, stated that with the improved reserve levels, the central bank was determined to continuously make forex avail- able to all genuine customers through their banks, advising those hoarding the greenback to reduce their losses by selling their dollar stock.
Travelex had on Thursday intervened in the Bureau De Change (BDC) segment of the market by selling $8,000 each to a total of 2,529 approved BDCs. This amounted to $20,472,000 that the currency dealers received.
The CBN during the week revealed that it would sell dollars via book-building process, which is a process of capturing demand in the market, to clear a backlog of demand for companies importing machinery, airline equipment and petroleum products.
Under this arrangement, Reuters reported that bidding firms were required to pay the Naira equivalent for their dollar bids on the spot market yesterday, while the USD will be delivered in two months’ time. But the CBN did not say how much it would offer at the sale.
The CBN recently introduced new FX measures which among others things was aimed at easing the burden of travelers and ensuring that transactions are settled at much more competitive exchange rates and had directed all banks to open FX retail outlets at major airports as soon as logistics permit.
The CBN has decided to significantly reduce the tenor of its forward sales from the current maximum cycle of 180 days, to no more than 60 days from the date of transaction.