By Joseph INOKOTONG with agency report
The Central Bank of Nigeria (CBN), Wednesday made spot sales totaling $100 million to Small and Medium Enterprises involved in the importation of critical and eligible finished and semi-finished goods.
This is part of efforts to boost dollar liquidity and prop up the naira currency, traders said citing a memo from the regulator.
The CBN said forex purchase will be paid for immediately in naira after the release of bid rates.
The naira closed on Tuesday at 306.10 per dollar on the official market and 410 on the black market.
The bank had been intervening on the forward market to meet demand, but customers with immediate need for dollars were piling back into the black market, causing the naira to begin to weaken in that segment.
The SMEs are the newly opened foreign exchange window for small scale importers.
The CBN also released its results of seven to 30 days wholesale interventions in the market, as authorised dealers fully subscribed to the $100 million offered at the auction in the interbank wholesale window on Monday, April 10, 2017.
The CBN spokesperson, Isaac Okorafor, said the new window for SMEs gave small scale importers an avenue to source for FOREX to boost their respective businesses through the importation of eligible finished and semi-finished items.
Mr. Okorafor said no SME would be allowed to transact more than $20,000 per quarter.
A CBN source said in an attempt to boost FOREX supply to interested users, the bank planned to not only to commence spot forex auction sales, but also open a special window for investors to trade freely for certain eligible transactions, particularly dividends and investment remittances .
The introduction of new windows to supply FOREX, the source explained, was to demonstrate the capacity of the CBN to sustain the current rate of liquidity in the market contrary to the pessimism by some experts.
“Going by the current level of reserves, the accretion from oil revenues and the subdued level of demand, the CBN has the capacity to sustain supply, even if it has to keep doing so for the next three months,” the source, who requested his name not to be revealed, said.
The source said last September, the CBN had survived with a reserve level as low as $24 billion, which was lower than the current reserve levels by over $6 billion.
“With $6 billion, the CBN can conveniently sustain the market for a long time, coupled with ongoing steady accretion from global oil prices, currently above $55 per barrel,” the source said.