CBN pumps $150m…but dealers could only buy $96m due to ‘fall in dollar demand’

The Central Bank of Nigeria (CBN) pumped $150 million into the foreign exchange market, via the interbank window, but dealers could only pick up $96.37 million due to fall in dollar demand.

CBN also commenced interventions in the new “Investors’ & Exporters’ FX Window” with the sale of $25 million to customers through authorized dealers.

This was disclosed by Isaac Okorafor, the bank’s spokesman, who reiterated that the window was established to boost liquidity in the forex market and ensure timely execution and settlement for eligible transactions.

According to him, transactions under the new window include invisible transactions such as “loan repayments, loan interest payments,  Dividends/Income Remittances, Capital Repatriation, Management Service Fees, Consultancy fees, Software subscription fees, Technology Transfer Agreements, Personal Home Remittances and any such 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, 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 is said to have impacted positive on the Nigerian stock market with stocks recording spikes.

Experts also believe that the new CBN window for investors and exporters will boost production with its attendant net effect of employment.

The CBN on Tuesday also announced that authorised foreign exchange dealers were unable to subscribe fully to the $150 million offered by the bank at the forex auction in the interbank wholesale window on Monday, April 24, 2017.

According to Okorafor the authorized dealers were only able to subscribe to the sum of $96.37 million in the inter-bank market on Tuesday, April 25, 2017.

While confirming the development, Okorafor did not disclose reasons for the inability of the authorized dealers to fully subscribe to the CBN offer in the inter-bank market.

However, industry sources attributed the situation to another spell of surfeit of forex in the financial system.