https://thestreetjournal.org/we-injected-15-3bn-into-the-economy-to-stabilize-naira-despite-currency-depreciation-in-2022-cbn/

The Central Bank of Nigeria (CBN), on Monday, January 16, said that it injected $15.3 billion into the economy to stabilize the value of naira in 2022.

This was obtained in the banking sector regulator’s monthly and quarterly economic report on foreign exchange market developments.

The report noted that $4.86 billion, $4.81 billion and $4.18 billion were injected into the economy during the first, second and third quarters of 2022, respectively, while $1.46 billion was injected in October.

The CBN stated that, “Total foreign exchange sales to authorized dealers by the bank, at $4.86 billion, decreased by 5.8 percent, compared with the previous quarter’s level.

“Disaggregation shows that foreign exchange sales at interbank/invisibles and SMIS windows declined by 16.9 percent and 10.8 percent to $1.46 billion and $1.79 billion, respectively, relative to the levels in the preceding quarter.

“Similarly, SME interventions and sales at the Investors & Exporters (I & E) window, decreased by 2.0 percent and 26.7 percent, compared with the amounts in the preceding quarter.”

The apex bank added that matured swap contracts rose by 187.33 percent, relative to the previous quarter’s level.

In the second quarter, the CBN stated that, “Total foreign exchange sales to authorised dealers by the bank at $4.81 billion, decreased by 0.9 percent, compared with the level in the preceding quarter.

“Disaggregation shows that SME interventions and sales at the investors & exporters window declined by 8.6 percent and 41.3 percent, relative to the preceding quarter.

“However, interbank/invisibles and SMIS windows, increased by 5.3 percent and 14.7 percent to $0.48 billion and $2.05 billion, compared with the amounts in the preceding quarter.”

Similarly, the CBN stated that matured swap contracts rose by 34.6 percent to $1.11 billion, relative to the previous quarter’s level, according to The Punch.

In the third quarter of 2022, the apex bank stated that, “Total foreign exchange sales to authorized dealers by the Bank decreased in the review period.

“Foreign exchange sales at $4.18 billion, decreased by 13.1 percent, below the level in the preceding quarter.

“A disaggregation shows that foreign exchange sales at the Secondary Market Intervention Sales (SMIS) and Investors’ and Exporters’ windows, decreased by 10.5 percent and 4.3 percent to $1.83 billion and $0.79 billion, respectively.

“Similarly, matured swap contracts fell by 48.9 percent, relative to the second quarter of 2022.”

However, the apex bank noted that sales at the Small and Medium Enterprises (SMEs) and interbank/invisibles windows increased by 32.4 per cent and 10.0 percent to $0.46 billion and $0.53 billion, respectively, relative to the levels in the preceding quarter.

The CBN added that, “Total foreign exchange sales to authorized dealers by the bank was $1.46 billion, an increase of 31.7 percent, relative to $1.11 billion in September.”

The apex bank noted that a disaggregation showed that foreign exchange sales at the SMES, SMIS, and the invisibles window increased by 27.0 percent, 21.2 percent and 61.2 percent to $0.15 billion, $0.58 billion, and $0.24 billion, respectively, relative to the previous month’s levels.

Recall that the naira as of December 30, 2022, exchanged at N440 per dollar on the I & E window, but in the parallel market where a large part of the demand is settled, the local currency faced the highest level of volatility in its over 50 years’ history where it met series of devaluations and adjustments based on market realities.

It was not only devalued by 60 percent in the last 18 years but in 2001 alone, its value was slashed 27 percent and its value has over the years, continued to plummet rapidly.

There are allegations of foreign exchange hoarding against commercial banks, with customers claiming that dollars meant for the retail end of the market are not getting to beneficiaries.

This practice has worsened dollar scarcity and volatility in the forex market, with foreign investors having a rethink on investing in the economy, fearing that they may not be able to repatriate funds at the expiration of their investments.

The International Monetary Fund (IMF), in 2022, advised CBN to allow commercial banks determine dollar buy-sale rates to boost foreign capital inflows to the economy.

The multilateral institution noted that a unified and market-clearing exchange rate remains critical to enhancing confidence of foreign investors and attracting more foreign capital to the economy.

Meanwhile, the Bank of America (BoA), in October 2022, said that while the naira will come under increasing pressure “due to limited government external borrowing in 2023,” devaluation is unlikely to happen until after the forthcoming general elections.