The Central Bank of Nigeria sold $4.86 billion worth of foreign currency to government dealers during the first quarter of 2022. This indicates a decline of 5.8% from the previous quarter.
This was revealed in the Central Bank’s latest economic and statistical report for the first quarter of 2022.
The sale of foreign currency by the central bank is done to stabilize the naira, however, the stability of the official exchange rate comes at a cost to the reserves as the central bank sells foreign currency in the official window from its external reserves.
Despite multiple interventions by the Central Bank of Nigeria to defend the Naira, the Naira fell N22 in the first quarter of 2022. The average turnover of the Investors and Exporters (I&E) segment decreased by 35.8% compared in the prior quarter, reflecting shrinking liquidity in the window.
What the CBN says
The CBN said, “Total FX sales to Bank-approved brokers of $4.86 billion were down 5.8% from the prior quarter level. The disaggregation shows that sales of foreign exchange at interbank/invisible counters and SMIS decreased by 16.9% and 10.8% to $0.46 billion and $1.79 billion, respectively, from the levels of the previous quarter. “
The news continues after this announcement
The bank also said activity in the official CBN exchange rate market had declined. The bank said, “SME interventions and sales at the Investors and Exporters (I&E) window decreased by 2.0% and 26.7% to $0.38 billion and $1.41 billion, compared to the amounts of the previous quarter. However, expiring swap contracts rose 187.33% to $0.82 billion, compared to the previous quarter’s level.
The bank added, “Average revenue for the Investors and Exporters (I&E) segment decreased 35.8% to $0.12 billion from the prior quarter, reflecting lower liquidity in the window.”
What you should know
- Due to the massive depreciation of the Naira on the black market, the difference between the official values and the black market values reached a whopping N271.
- The black market exchange rate fell by 48.87% over the year to trade at N/$705 at the time of writing, while the official Naira exchange rate at the CBN remained relatively steady at around N/$434.
- The decline in the supply of currencies meets a growing demand for dollars. Nairametrics reported earlier that thousands of applicants face nerve-wracking experiences as they get their PTA in two or three installments depending on what is available in the bank’s vault.
- Since dollars at the official exchange rate are hard to come by and rationed, this leaves the general population with no choice but to obtain Forex through other means.