CBN’s quarterly forex intervention drops by $930m

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The Central Bank of Nigeria’s foreign exchange intervention in the economy declined by $930m in the third quarter of 2021 to $4.03bn from $4.96bn in Q2.

The CBN disclosed this in its report on the supply of forex for the third quarter of 2021.

Its intervention in the Investors & Exporters, SMEs and the invisible market rose from $2.97bn in Q2 to $3.3bn in Q3, while interbank intervention rose from $540m to $730m.

The CBN’s intervention in the Bureau De Change market was $1.43bn in Q2, but there was no intervention in Q3, according to the report.

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The apex bank had in July last year stopped the sales of foreign exchange to BDC operators.

The CBN Governor, Godwin Emefiele, had said at one of the Monetary Policy Committee meetings that the MPC noted with disappointment and great concerns that the BDCs had defeated their purpose of existence to provide forex to retail users.

He said they had become wholesale and illegal dealers.

While announcing its decision to discontinue the sale of forex to them in July, he said the commercial banks would be monitored to provide forex for the legitimate use of Nigerians.

The President, ABCON, Alhaji, Aminu Gwadabe, said in a recent statement that the BDC subsector was becoming comatose since July 2021 MPC meeting where the CBN suspended weekly dollar interventions to the BDCs.

He advised the CBN to de-risk BDCs’ operations to allow operators access foreign exchange from autonomous sources in 2022 and beyond.

According to him, while BDCs are licensed to offer retail forex sales across the counter forex transactions, they equally contribute to Nigeria’s economic development.

He said the BDCs were ensuring order and confidence in the forex market, providing data for monetary policy and channels for CBN intervention in the retail forex market as well as the creation of over 15,000 jobs, among others.

Gwadabe said over N1tn annual transaction volume by the BDCs subsector was under threat while huge capital investment was becoming redundant, gradually being eroded and winding up.

He advised that just like the apex bank de-risked the agricultural sector by making it easier for agriculturalists to access cheaper loans at single digit from banks, it could also de-risk the BDCs’ operations to enable them to receive diaspora remittances through the International Money Supply Operators and deepen foreign capital flows to the economy.

“ABCON understands the challenges faced by the apex bank due to the dwindling foreign reserves, declining oil output and oil theft, COVID-19-induced economic pains, fiscal policy challenges, debt burden and election spending, which are making it difficult for the CBN to sustain weekly dollar interventions to BDCs,” he said.