In continuation of its intervention in the inter-bank foreign exchange market, the Central Bank of Nigeria (CBN) on Friday, June 28, 2019, injected the sum of $242.04million into the retail Secondary Market Intervention Sales (SMIS) and CNY 32.3million in the spot and short tenored forwards segment of the inter-bank foreign market.

The Bank’s Director, Corporate Communications Department, Isaac Okorafor disclosed that the intervention was for requests in the agricultural and raw materials sectors, adding that the Chinese Yuan, on the other hand, was for Renminbi-denominated Letters of Credit.

Mr. Okorafor further expressed satisfaction over the stability of the foreign exchange which according to him, was largely due to sustained intervention by the Bank. He assured that the apex Bank Management would remain committed to ensuring that all the sectors of the forex market continue to enjoy access to the needed foreign exchange.

He reiterated that with improved inflow of foreign exchange, the exchange rate had remained stable around N360/$1 for the past 27 months.

It will be recalled that the Bank on Tuesday, June 25, 2019, offered authorized dealers in the wholesale segment of the market the sum of $100million, while the Small and Medium Enterprises (SMEs) and the invisibles segments each received the sum of $55 million.

Meanwhile, $1 exchanged for N361 at the Bureau de Change (BDC) segment of the foreign exchange market, while CNY1 exchanged at N55 on Friday, June 28, 2019.

https://www.akelicious.net/2019/06/cbn-injects-24204m-cny-323m-into-retail.html

All these injections since last year...
I hope it's not like injecting adrenaline into a weak bone?
Because the collapse is usually catastrophic when you run out of adrenaline.
Floating economy.
Help thine people oh lord

people still they sleep na

CBN should pls inject my paralyzed account, even if it's N4m. That account has been down for too long

Injection without outcome

What's the effect Biko?

Lovely

Emefiele has nothing to offer. He was only retained because he is disgusting monies for RUGA

Is it now expected that FX will come down or stabilize well next week? D should pump euros too

I hope all this pumping will have a positive effect on the economy and boost the Naira


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The next crisis will not be a joke my people. You all should be ready.

What are they injecting, we are tired of these their constant injections without any good outcome...

Economy on life support, manually controlled, the moment the government stops supporting....

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saxwizard:
people still they sleep na

No. People are still busy planning Sunday Protest at COZA.

Up and ready for business. Wechat wallet and normal Chinese account are available for your transactions. With very good rates. Watsapp number 08168152166.

When invisible sector start receiving money, just know that oil prices have gone up and the craze begins. God help us

For Nigerians who want this explained in laymans terms.

Buhari and the Nigerian government insist on maintaining a stronger Naira than the market actually thinks there should be.

The result is that Nigeria has two foreign exchange rates a black market unofficial exchange rate which has a much lower Naira value. Then there is a Second official exchange rate propped up by the CBN.

The latter requires constant injections to maintain this artifically high Naira value.

This scenario is unsustainable as the Naira should be weaker in truth. The government doesnt want this as it would mean imported goods would become way more expensive. From rice for the poor man to luxury goods for the political elites.

The exchange rate gap between the official naira and black market naira value is being exploited by traders both here in Nigeria and abroad who buy Naira at the low black market rate and sell it back at the higher official rate
A number of banks in London were engaged in this activity and make millions a year from this trade.

A currency is strong if the underlying economy is strong.

THE NAIRA SHOULD BE ALLOWED TO FLOAT(FALL IN VALUE IF NEED BE) AND NIGERIA MUST FACE IT'S DEMONS (THE NEED FOR REAL ECONOMIC REFORM AND DEVELOPMENT)

Send this message to your fellow Nigerians..

nograv:
For Nigerians who want this explained in laymans terms.

Buhari and the Nigerian government insist on maintaining a stronger Naira than the market actually thinks there should be.

The result is that Nigeria has two foreign exchange rates a black market unofficial exchange rate which has a much lower Naira value. Then there is a Second official exchange rate propped up by the CBN.

The latter requires constant injections to maintain this artifically high Naira value.

This scenario is unsustainable as the Naira should be weaker in truth. The government doesnt want this as it would mean imported goods would become way more expensive. From rice for the poor man to luxury goods for the political elites.

The exchange rate gap between the official naira and black market naira value is being exploited by traders both here in Nigeria and abroad who buy Naira at the low black market rate and sell it back at the higher official rate
A number of banks in London were engaged in this activity and make millions a year from this trade.

A currency is strong if the underlying economy is strong.

THE NAIRA SHOULD BE ALLOWED TO FLOAT(FALL IN VALUE IF NEED BE) AND NIGERIA MUST FACE IT'S DEMONS (THE NEED FOR REAL ECONOMIC REFORM AND DEVELOPMENT)

Send this message to your fellow Nigerians..

I agree with your analysis, it is not sustainable in the long run, but its a palliative aimed to ameliorate the suffering of the poor. If the market were to be deregulated, Bubu no for win him 2nd term.

Adam09:

I agree with your analysis, it is not sustainable in the long run, but its a palliative aimed to ameliorate the suffering of the poor. If the market were to be deregulated, Bubu no for win him 2nd term.

Sadly true, as with fuel subsidies and artificially low power prices. We need a true leader who would take on these real challenges head on..

FX Traders in the UK were laughing about how much money they were making at Naija's expense. I wont lie it was there I first became aware of the issue and it pained me..

Not sustainable.

But it sure will make lots of people rich in a short while.

So let's say it's good as long as it last.

Adam09:

I agree with your analysis, it is not sustainable in the long run, but its a palliative aimed to ameliorate the suffering of the poor. If the market were to be deregulated, Bubu no for win him 2nd term.

No, it is a conduit for rampant corruption, nothing more. "The poor" are simply an excuse for continuing rent-seeking schemes which have actually worsened their plight, by undermining local business confidence and driving away foreign investment. Do you suppose it's a coincidence that all these supposedly "pro poor" schemes have coincided with massive increases in the numbers of poor people and the intensity of their suffering?

Chriswazo:
Is it now expected that FX will come down or stabilize well next week? D should pump euros too

Lolz....Na d 1 wey go favour u be dat. Germo hustle must pay. I share the same view with u broo.

Awol1:
All these injections since last year...

I hope it's not like injecting adrenaline into a weak bone?

Because the collapse is usually catastrophic when you run out of adrenaline.

Floating economy.

Help thine people oh lord

Oil is going South later this year..let's see what Emefeiele will do again

nograv:
For Nigerians who want this explained in laymans terms.

Buhari and the Nigerian government insist on maintaining a stronger Naira than the market actually thinks there should be.

The result is that Nigeria has two foreign exchange rates a black market unofficial exchange rate which has a much lower Naira value. Then there is a Second official exchange rate propped up by the CBN.

The latter requires constant injections to maintain this artifically high Naira value.

This scenario is unsustainable as the Naira should be weaker in truth. The government doesnt want this as it would mean imported goods would become way more expensive. From rice for the poor man to luxury goods for the political elites.

The exchange rate gap between the official naira and black market naira value is being exploited by traders both here in Nigeria and abroad who buy Naira at the low black market rate and sell it back at the higher official rate
A number of banks in London were engaged in this activity and make millions a year from this trade.

A currency is strong if the underlying economy is strong.

THE NAIRA SHOULD BE ALLOWED TO FLOAT(FALL IN VALUE IF NEED BE) AND NIGERIA MUST FACE IT'S DEMONS (THE NEED FOR REAL ECONOMIC REFORM AND DEVELOPMENT)

Send this message to your fellow Nigerians..

I've also been thinking about benefitting from the spread ever since i learned about the differences in the exchange rates. I think you made a mistake BTW. Traders are supposed to buy dollars at a lower ask from the CBN and sell to higher bids at the black market.

Do you have any idea how i can buy and sell to benefit from the current spread? I think it's about a 30 naira spread between the CBN rates and the black market rates

By the way, floating exchange rates would fuc.k us up. Nigerians have no way to hedge the value of their money. Floating exchange rates would sink purchasing power

haryomikun:

I've also been thinking about benefitting from the spread ever since i learned about the differences in the exchange rates. I think you made a mistake BTW. Traders are supposed to buy dollars at a lower ask from the CBN and sell to higher bids at the black market.

Do you have any idea how i can buy and sell to benefit from the current spread? I think it's about a 30 naira spread between the CBN rates and the black market rates

By the way, floating exchange rates would fuc.k us up. Nigerians have no way to hedge the value of their money. Floating exchange rates would sink purchasing power

No I haven't made a mistake as the arbitrage trade is on the naira not on the dollar.

I dont have any contacts for performing this trade as the Naira is highly illiquid. Very few places beyond large institutions allow you to exchange Naira.

Having a weaker Naira wouldn't necessarily mess us up. One for exporters a weaker Naira would be good thing as it would make their products cheaper on international markets so they could sell more..

The stronger Naira largely only helps importers and this is part of the problem were it not for oil, Nigeria's trade balance would be even worse.

Also maintaining this high exchange is costly, with the CBN constantly having to buy up Naira to maintain the exchange. That money could be used elsewhere more productively.

If you want to see the issues around maintaining an artificial exchange read about Britain's exit from the ERM.. Or read about why currency pegs often fail..

nograv:


No I haven't made a mistake as the arbitrage trade is on the naira not on the dollar.

I dont have any contacts for performing this trade as the Naira is highly illiquid. Very few places beyond large institutions allow you to exchange Naira.

Having a weaker Naira wouldn't necessarily mess us up. One for exporters a weaker Naira would be good thing as it would make their products cheaper on international markets so they could sell more..

The stronger Naira largely only helps importers and this is part of the problem were it not for oil, Nigeria's trade balance would be even worse.

Also maintaining this high exchange is costly, with the CBN constantly having to buy up Naira to maintain the exchange. That money could be used elsewhere more productively.

If you want to see the issues around maintaining an artificial exchange read about Britain's exit from the ERM.. Or read about why currency pegs often fail..

Thanks for the reply, sir. I reread what you wrote about the arbitrage trade in the naira. I think we meant different things. I was talking about arbitrage trading in the dollar. Buying low and selling high.

True, devaluation always helps exporters. However, a lot of the goods we have in Nigeria aren't being produced here. Meaning if several importers go out of business, there'll be a lot less variety of goods and a drop in the standard of living. We don't have local products that can be substituted for most of these foreign imports.

Individuals and businesses can fully benefit from devaluation only if there are substitute goods. In Nigeria, a country where we don't even produce matchsticks, I'm not so sure about the advantages.

Besides, I think even with the devaluation benefit for exporters, our real GDP would be negatively affected too.

I hope Nigeria really works this out though.

I'll read up on the British Exit from the ERM. It's open on investopedia... Black Wednesday