Forex: CBN Sold $500m, Speculators Set To Count Losses

Central Bank of Nigeria CBN sold about $500 million to foreign investors on the spot and forward market to gauge the level of foreign exchange demand in the market.

The CBN offered a 150 day forward on the currency market and also sold on the spot market to banks, foreign exchange dealers said. The CBN has gradually restarted dollar sales after it halted supplies following a coronavirus-induced lockdown to slow the spread of the virus, which also reduced its activities.

Dollar demand has been swelling and piling pressure on the Naira. Importers with past due obligations have scrambled for hard currency, while providers of foreign exchange, such as offshore investors, have exited.

Foreign investors have sold Nigerian assets since February because pandemic lockdowns stalled economic activity and triggered a crash in the price of oil, Nigeria’s main export. The central bank has in the past urged investors to be patient, saying funds can exit in an orderly fashion.

On Wednesday, the spot market traded $38.46 million. The Naira firmed almost 10% on the black market to 435 against the dollar on Tuesday on anticipation of resumed dollar sales. The dollar was quoted at N380.50 on the official market.

Meanwhile the CBN has said that currency speculators in Nigeria’s foreign exchange market are set to count huge losses as the Naira continues to surge against the dollar, following the interventions made by the Central Bank of Nigeria (CBN) in the Investors and Exporters (I&E) window.