- Forex Intervention: CBN Spends $39bn in 2018
The Central Bank of Nigeria spent a total of $39.9 billion on foreign exchange intervention between January and December 2018.
The details contained in the fourth quarter economic report of the CBN revealed that the apex bank used the $39.9 billion to defend the Naira against the U.S. dollar and stimulate economic growth by providing adequate forex liquidity to authorised dealers.
Dealers in the wholesale segment are required to sell forex at a stipulated rate to sectors like the agriculture, manufacturing and Small and Medium Enterprises segment.
The programme also ensures customers in need of tuition fees, medical payments, and basic travel allowance access forex at affordable rates.
A breakdown of the intervention showed that the central bank injected around $10.97 billion into the foreign exchange market in the first quarter of 2018.
The figure dropped to $7.89 billion in the second quarter, while the third quarter saw intervention rising by $3.99 billion to $11.88 billion.
In the fourth quarter, a total of $9.18 billion was injected into the foreign exchange market.
Speaking on forex policy, Prof. Uche Uwaleke, the Head, Department of Finance, Nasarawa State University called on the central bank to explore alternative ways of stimulating the economy.
He said, “There is no doubt that the CBN’s forex policies have helped the growth of local industries in Nigeria. Notable among these is the restriction of access to official forex placed on 41 imported items.
“This measure was not only in support of the Federal Government’s import substitution strategy, but it was also a demand- management strategy, which helped to conserve scarce forex, especially during the period of oil price slump.
“Today, thanks to that restrictive measure, a number of products, which were hitherto not produced here such as toothpicks, are now being manufactured locally.
“The introduction of the investors’ and exporters’ window, on the back of crude oil price, recovery, has equally helped to stabilise the exchange rate, facilitating raw materials imports for local firms.
“That said, the CBN should continue to explore innovative ways to support domestic industries beyond the use of forex policies.”