CBN reveals injection of $18bn into 2022 forex market

The Central Bank of Nigeria (CBN) continued to periodically intervene in the foreign currency market in 2022 by injecting an additional $17.81 billion into the interbank foreign exchange market.

This was a modest increase from the $16.55 billion injected in 2021, according to the CBN’s “Financial markets department annual activity report 2022.”

The CBN observed that higher purchases from international oil companies were to blame for the rise in the amount of foreign exchange purchases in 2022.

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The report read in part, “In the review period, the Bank maintained its intervention in the inter-bank foreign exchange market to cushion demand pressure and promote exchange rate stability. Consequently, total sales stood at US$17,811.18 million, comprising spot sales of US$7,116.93 million and forward sales of US$10,694.25 million.”

A breakdown of the spot sales showed that $2.46bn was sold on the 1&E window, $1.43bn at the inter-bank, $1.6bn sold to SMEs, and $1.63bn for Invisibles (that is, customers purchasing foreign exchange for tuition fees, medical payments and Basic Travel Allowance, among others,).

The report read, “The spot sales comprised US$2,463.95 million at the I & E window (otherwise referred as the Nigerian Autonomous Foreign Exchange, NAFEX, market); US$1,426.85 million at the inter-bank; US$1,598.49 million for SMEs; and US$1,627.64 million for invisibles. Conversely, the Bank purchased a total of US$2,169.61 million at the inter-bank market.

“Thus, net sales by the Bank amounted to US$15,641.57 million. Meanwhile, the sum of US$13,530.76 million matured at the forwards segment, while US$8,313.73 million remained outstanding at end-December 2022.

“In the preceding year, total sales stood at US$16,548.63 million, comprising spot sales of US$8,821.05 million and forward sales of US$7,727.58 million. The spot sales comprised US$4,844.52 million at the I & E window, US$1,032.13 million at the inter-bank, US$1,527.50 million for SMEs and US$1,375.23 million for invisibles.

“Conversely, the Bank purchased US$1,693.24 million, resulting in a net sale of US$14,813.72 million. The sum US$9,411.36 million matured at the forwards segment, while US$4,400.60 million remained outstanding at end-December 2021.”