05Sep 2017

INCREDIBLE!!! CBN Waste $9bn to Defend Naira in 7 Months

By Unknown0business, CBN, Central Bank of Nigeria, forex dealers, FX market, JP Morgan, Naira, Permalink

Central Bank of Nigeria reportedly sold $9 billion to forex dealers through the interbank market between February 21 & August 31.

The FX sales were intended to cover for personal & business travels, medical needs, & school fees, futures market & other approved transactions.

At the time CBN started massive funding of the FX market, the naira had lost considerable value, trading at over N500/$1 at the parallel market.

The CBN intervention, from the improved government dollar earnings saw the naira recover to over N485/$1 in early March 2017.On February 21, when the CBN interventions began, the CBN offered for sale $370,810,810.

Prior to Nigeria's FX crisis, the market was funded by both the private sector & the CBN. At the start, Nigeria had about $2.7bn foreign investment from the JP Morgan & $500 million from Barclays but all of these monies were take out when the CBN tightened controls on the naira.

Mr. Moses Azege, a Lagos based financial expert said, the CBN intervention was unusual, the market didn't expect it but it worked in stabilising the market.

Mr. Rislanudeen Mohammed, the former Ag. Managing Director, Unity Bank Plc said the "Central Bank intervention over the last several months has impacted positively in stabilizing the foreign exchange market & reducing the gap between parallel & black market rates from about N520 to a dollar to the present rate of about N365.".