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Nigeria injects $210m into Forex


Central Bank of Nigeria (CBN) has continued its intervention in the inter-bank foreign exchange market by injecting $210 million into key portfolios of the market and continues its currency swap deal with China.
 
The intervention fund released on August 14, 2018, is meant to sustain flow small and medium enterprises, Forex window and travel allowances, just as the swap deal is to ease pressure on the foreign exchange market.
 
The Acting Director,  Corporate Communications, CBN, Mr Isaac Okorafor, said in Abuja that the apex bank offered $100 million as wholesale interventions and allocated US$55 million to Small and Medium Enterprises.
 
Okorafor said another US$55 million was allocated to customers requiring foreign exchange for business and personal travels, tuition or medical fees, among others.
 
The CBN spokesman said the bank was pleased with the performance of the naira because it had continued to enjoy stability against the dollar and other major currencies of the world in recent times.
 
 He reassured the public that the CBN would continue to intervene in the interbank foreign exchange market to ensure liquidity in the foreign exchange market and maintain stability.
 
 Okoroafor reiterated, in a statement, that the steps taken by the CBN in foreign exchange management had resulted in further reduction in the country’s import bills and accretion to its foreign reserves.
 
 CBN on August 10, intervened in the Retail Secondary Market Intervention Sales (SMIS) to the tune of $327 million in the agricultural and raw materials and 69 million Chinese Yuan in the spot and short-tenored forwards.
 
Meanwhile, the naira continued to maintain its strong stand against major currencies around the globe, exchanging for N360 to a dollar in the Bureau De Change segment of the market.
 
Meanwhile, the CBN has resolved to sensitize stakeholders in Abuja and the adjoining States to the Bilateral Currency Swap Agreement between the CBN and the People’s Bank of China (PBoC) signed on April 27, 2018.
 
The Naira-Yuan swap deal is set to be achieved as part of strategies to reduce the huge dollar demand and pressure on the local currency.
 
Nigerian officials and those from China have met to fine tune the deal, CBN Governor Godwin Emefiele, said.
 
According to him, there is a lot of “networking meetings going on, and I can assure you that meetings are going on with some of our partners, particularly, China.”
 
The agreement will allow the two sides to swap a total of 15 billion Chinese yuan (2.35 billion dollars) for 720 billion Nigerian naira, or vice versa, in the next three years, the People’s Bank of China (PBOC) said on its website.
 
The move is aimed at facilitating bilateral trade and investment and promoting the financial stability of both sides, the PBOC said. The deal can be extended by mutual consent.
 
A currency swap deal allows two institutions to exchange payments in one currency for equivalent amounts in the other to facilitate bilateral trade settlements and provide liquidity support to financial markets.
 
In 2014, the CBN’s deputy governor, Kingsley Moghalu, said the bank was looking to increase the percentage of Yuan foreign reserves in its possession from two per cent to seven per cent.
 
According to him, 85 per cent of its foreign reserves were in dollars and it needed to have more in Chinese Yuan, as the country was taking a more important place in global trade.
 
“It was clear to us that the future of international economics and trade will shift in large part to business with and by China. Ultimately the renminbi (Yuan) is likely to become a global convertible currency,” Moghalu said.
 
Since 2014, the world market has recognised the Yuan as a likely global reserve currency, a replacement for the dollar, which has led countries like Ghana, South Africa and Zimbabwe to integrate the renminbi (Yuan) into their financial markets.
 

As a result of this, trade (however imbalanced) has increased between certain countries on the continent and China, as well as providing a fertile ground for demand for the currency on the continent.