Transactions at Nigeria’s autonomous foreign exchange market- the Investors and Exporters (I&E) Window, hit a record $1.7 billion in one week, despite relative losses by the local unit across segments.
The transactions, came amid the take off of the three-time weekly auctions for the Bureau De Change (BDC) operators, mandated by the Central Bank of Nigeria (CBN).
Already, CBN’s data on Purchasing Managers’ Index (PMI) for May 2018, showed sustained expansion in both the manufacturing and non-manufacturing sectors for the 14th and 13th consecutive months respectively, riding on increasing forex.
This persistent improvement was attributed largely to the positives that have translated into improved access to forex by businesses, particularly since the launch of Investors’ and Exporters (I&E) FX window in April 2017.
The manufacturing PMI expanded to 56.5 points, growing at a slower pace compared to 56.9 points recorded in April 2018, due to a slower increase in two components of the index – Inventories (58.7 points) and new orders (54.9 points).
Similarly, the non-manufacturing PMI, expanded to 57.3 points, 0.2 points lower than 57.5 points recorded in April 2018, with a slower growth rate in three components of the index – Business activity (58.7 points), New orders (55.9 points) and Inventories (59.2 points).
The I&E Window had opened the week’s trading with the naira flat at N361.57/$ and by midweek, it depreciated by 45 kobo to N362.02/$, but reversed the losses with N1.05 and 12 kobo gians on Thursday and Friday respectively, to close the week at N360.85/$.
Subsequently, activity level in the I & E window strengthened as total turnover on Thursday rose by 92.8% to $1.7 billion against $883.9 million recorded the previous week.
Also, the CBN spot rate weakened at the start of the week, depreciating five kobo to N305.95/$ against N305.90/$ recorded in the previous week and remained unchanged till Thursday.
At the close of transactions on Friday, the CBN spot rate further declined by five kobo to N306/$, while the parallel market, which opened the week at N364/$, depreciating by N1 against the previous week’s record, regained the loss as it ended the week at N363/$.
Meanwhile, the nation’s stock of external reserves remained at $47.6 billion, despite sustained interventions, which volume notched up with the new mandate to BDCs to increase the purchase of foreign exchange thrice a week.
The apex bank, last week, auctioned a total of $541.41 million to the forex market in two interventions that helped the local unit to regain lost weight against other major currencies.
But in preparation for the resumption of trading activities this week, CBN ended the week with the second intervention worth $331.41 million to players in different sectors of the forex market.
CBN’s Bank’s Acting Director, Corporate Communications Department, Isaac Okorafor, said companies in the agricultural, airlines, petroleum products and raw materials and machinery sectors were the beneficiaries of the intervention.
He explained that the continued interventions in the forex market was to guard against illiquidity and checkmate actions of speculators that could mount pressure on the country’s reserves.
Reiterating the assurances of the CBN Governor, Godwin Emefiele, he said the bank was buoyant enough to meet the foreign exchange requests of various customers cut across the different segments of the market.
He therefore charged every customer requiring foreign exchange to approach their respective banks with relevant documents to make formal requests, stressing that the authorized dealers had enough supply to meet every legitimate request.