The Central Bank of Nigeria has sold a total number of $9.4 billion in forex in the foreign exchange market first 6 months of 2022.
This is disclosed in data released by the CBN in its half-yearly economic report. The apex bank intervenes in the foreign exchange market via spot and forward sales at the investor’s and exporters’ windows.
The central bank sells forex as part of its policy of intervention in the foreign exchange market. It does this to control the price of forex by selling more when it needs a stronger naira or purchasing when it believes the naira is strong.
What This Could Mean?
A higher forex intervention could suggest that the apex bank is burning through Nigeria’s reserves that could be used for other purposes.
It also reveals how much liquidity is in the official forex market. This helps determine if the parallel market prices are over-depreciated or need further devaluing.
CBN $9.4 Billion In Forex Explained
According to the central bank, it sold a total of $9.4 billion in the first half of the year with 47.5% of it. Also $4.38 billion sold via the sports market.
This is followed by another $4.3 billion sold via forward sales totaling 52% of total sales. It also revealed that the breakdown of the spot sales includes $2.07 billion sold at the Investors and Exporters (I&E) window.
Another was revealed to be sold at the Small and Medium Enterprises (SMEs) and inter-bank Secondary Market Intervention Sales (SMIS) accounted for $622.92 million.
CBN’s Reaction
Asides from selling, the CBN also purchased forex, admitting that forex was bought around $1.3 billion in the first quarter of the year.
“Conversely, the Bank purchased $1,325.43 million during the review period, which resulted in a net sale of $7,903.83 million”. It stated
In addition, the sum of $7.0 billion matured in the forwards segment, while $5.8 billion was outstanding at the end of June 2022.
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