The Central Bank of Nigeria (CBN) on Tuesday, underscored its determination to sustain liquidity in the foreign exchange market with the injection of $280 million into various sectors of the market and the commencement of its weekly $20,000 sale to licensed Bureaux de Change. It also further announced the opening of bids for offering $100m wholesale 7-45 days forwards through the Deposit Money Banks (DMBs).
A breakdown of the intervention shows that invisibles such as Basic Travel Allowance, Personal Travel Allowance, medical bills and tuition received $80 million, while the Small and Medium Enterprises (SMEs) window received $100 million. Together with the wholesale bid auction, the Bank, on Tuesday, sold $280 million into the market.
The Bank’s spokesman, Isaac Okorafor, confirmed the releases, disclosing that the new window for SMEs would no doubt boost the business of SMEs through the importation of eligible finished and semi-finished items, thereby boosting FOREX supply to the retail business segment of the market.
Okorafor further explained that the CBN introduced the use of FORM Q for the SMEs, which requires just basic documentation, to ease their documentation challenges usually encountered by this category of businesses. He reiterated that SMEs are allowed to purchase $20,000 per quarter on this arrangement.
He restated that the new form, which must be completed by all SME applicants, requires the applicant to fill the form with a supporting application letter as well as beneficiary invoice and bank wire transfer. According to him, eligible applicants must have operated their bank accounts for a minimum of six months.
On the sale of forex to BDCs, the Bank said the decision was taken to ensure that the high volume demand by low-end users are met promptly.
Meanwhile, with the intervention of the CBN in the various aspects of the market, analysts are of the view that the naira will strengthen against other major currencies of the world in the forex market this week and beyond.
While urging market participants to abide by the rules to ensure the preservation of our external reserves, stability of our financial system, and growth of our economy to the benefit of all Nigerians, the Bank’s spokesman warned that the CBN would neither tolerate unscrupulous actions nor hesitate to bring serious sanctions on offenders, be they banks or their staff.