The Central Bank of Nigeria has said that dollar inflows into the economy through the newly introduced Investor and Exporter (I&E) Forex Window have hit $2.2 billion.
The I&E FX window was introduced by the Central Bank of Nigeria (CBN) on April 24 to enable portfolio investors sell dollars at rates of their choice, if they get buyers.
Briefing reporters at the end of the 333rd meeting of the committee in Lagos, CBN Director, Banking Supervision, Abdulahi Ahmad, said the inflows, registered in the I&E Window had helped to stabilise the foreign exchange market.
The inflows also created more possibilities and positive feedback that the economy would come out of recession in the third quarter, he added.
The CBN, Ahmad said, must defend the naira, and ensure that the exchange rate did not deteriorate. “We will continue to defend the local currency against the dollar and ensure that the naira does not deteriorate. The ongoing convergence of the exchange rate is an indication that the economy is picking up.”
Speaking at the meeting, Stanbic IBTC Bank Plc Deputy Managing Director Demola Sogunle said the committee acknowledged the CBN’s efforts in encouraging foreign portfolio investors who have contributed to shoring up the inflows into the I&E Window.
Liquidity, he said, was gradually returning to the forex market, adding that CBN’s share of the market is currently less than 30 per cent. “When the window was opened, the bid offer spread was between N40 and N50, but the bid-offer rate has reduced. The Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) and parallel market gap has also reduced, even as portfolio investors are returning,” he said.
The committee also discussed the need to cut interest rate, as requested by the Senate so as to grow the economy.
On CBN’s continuous intervention in the forex market, the committee said the regulator remained a major player in the economy. The CBN, the committee added, is a seller and buyer in the forex market. It said as dollar inflows into the economy continue to improve, CBN’s interventions in the market would likely drop.
The committee said although the CBN had spent over $5 billion to defend the naira and support manufacturing and other key sectors of the economy, the foreign reserves still remained robust.
Standard Chartered Bank Managing Director Bola Adesola said the Agric/SMEs equity fund contributed by the banks stood at N26 billion, adding that the lenders were developing framework on how SMEs could access the funds.
“The fund will help SMEs to build capacity, but we want to ensure that we have the right governance to the equity fund,” she said.
Fidelity Bank Plc Managing Director Nnamdi Okonkwo said the committee agreed to suspend all charges on microfinance bank customers that want to enroll on the Bank Verification Number network.
He said such services would now be carried out free of charge, adding that the plan was in line with the CBN’s financial inclusion agenda.
Also, in its latest move to further rein in inflation, the CBN has unveiled plans to mop up a total of N200.322 billion from the banking system through a special Open Market Operation (OMO) at the rate of 16 per cent per annum.
The CBN said its decision to mop up liquidity was in reaction to the maturity of N206 billion.
CBN spokesman Isaac Okorafor explained that the apex bank decided on the rate of 16 per cent per annum due to the falling rate of inflation, which he noted will continue to drop.
This followed Monday’s release of Treasury Bills Issue Programme for the third quarter of 2017 in which the apex bank disclosed that the maturity dates for the various tenors will be June 15, June 22, July 6, July 20, August 3, August 17 and August 31, 2017, respectively.