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As part of the efforts to ensure the stability of the Nigerian currency, the Central Bank of Nigeria (CBN) has the plan to inject $4.37bn into the foreign exchange market in the third quarter of 2020.
AllNews learned that the CBN who disclosed this in its third-quarter economic report said its periodic interventions in the forex market will continue to boost the supply side of the market, as the COVID-19 crisis weakened the private sector supply chain segment of the market.
The statement read in part, “During the third quarter of 2020, total foreign exchange sales to authorized dealers by the bank amounted to $4.37bn, a decline of 2.3 percent from the level in the preceding quarter.
“This was attributed largely to the decrease in wholesale forward intervention and interbank sales. The total foreign exchange sales represented a decrease of 56.4 percent, compared with the corresponding quarter of 2019.”
It added, “Further disaggregation showed that matured swap transactions and SMIS intervention rose by 50.8 percent and 0.7 percent to $1.24bn and $1.96bn, from the levels in the preceding quarter.
“However, interbank sales, interventions at the I&E window, and SME fell by 22.3 percent, 18.7 percent and 3.5 percent to $0.15bn, $0.39bn and $0.30bn relatives to their levels in the preceding quarter.”
The report further stated that foreign exchange cash sales to Bureau de Change operators were $0.33bn in the review period.
The CBN said it sustained interventions in the forex market and resumed forex cash sales to the BDC operators to boost liquidity and ease demand pressure.
It stated that the exchange rate of the naira against the dollar was further adjusted during the review period from N361/$ to N381/$. it also said it introduced measures to curb abuses and ensure prudent use of forex.
The banking regulator said it directed all authorised dealers to desist from opening Forms M with payments routed through third parties.
This policy was aimed at eliminating occurrences of over-invoicing, transfer pricing, double handling charges, and avoidable costs, which were ultimately passed on to Nigerian consumers.
The CBN stated that the Deposit Money Banks were directed to block domiciliary accounts of some companies involved in forex abuses, for investigation.