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Forex: CBN sells $3.96bn to BDCs in nine months

The Central Bank of Nigeria (CBN) sold foreign exchange amounting to $3.96 billion to the Bureaux De Change (BDC) segment of the foreign exchange market between January and September this year, latest data released by the apex bank shows.

 

Findings by New Telegraph indicate that this figure is $6.46 billion (62 per cent) less than the $10.42 billion that the apex bank sold to the same segment of the forex market in the corresponding period of last year.

 

New Telegraph’s analysis of data obtained from the CBN, in fact, shows that when compared to 2019 figures, the regulator’s forex sales to authorised dealers, including BDCs, only headed north in Q1 2020, as the sharp drop in the price of oil – the commodity that accounts for about 90 per cent of the country’s export earnings – coupled with the Coronavirus (COVID- 19) crisis, resulted in a decline in external reserves, thus forcing the CBN to scale down the amounts it injected into the forex market to defend the naira.

 

For instance, in its Q3 2020 economic report released a few days ago, the CBN stated: “During the third quarter of 2020, total foreign exchange sales to authorised dealers by the bank amounted to $4.37 billion, a decline of 2.3 per cent from the level in the preceding quarter.

 

“This was attributed largely to the decrease in wholesale forward intervention and interbank sales. The total foreign exchange sales represented a decrease of 56.4 per cent, compared with the corresponding quarter of 2019.

 

Further disaggregation showed that matured swap transactions and SMIS intervention rose by 50.8 per cent and 0.7 per cent to $1.24 billion and $1.96 billion, from the levels in the preceding quarter.

 

“However, interbank sales, interventions at the I&E window and SME fell by 22.3 per cent, 18.7 per cent and 3.5 per cent to $0.15 billion, $0.39 billion and $0.30 billion relative to their levels in the preceding quarter.

 

Foreign exchange cash sales to BDCs was $0.33 billion in the review period.” By comparison, the CBN’s data shows that it sold a total of $3.54 billion to BDCs between July and September last year. Similarly, in its Economic Report for Half Year 2020, the CBN said: “The precautious level of economic activities hampered foreign exchange supply to authorised dealers.

 

Total foreign exchange supply to authorised dealers by the bank stood at $13.98 billion, indicating a decline of 15.3 per cent each, below the levels in the preceding half year and the corresponding half of 2019, respectively.

 

Of the total, inter-bank sales amounted to $0.38 billion, compared with $0.62 billion and $0.81 billion in the preceding six months and the corresponding period of 2019, respectively.

 

“At the BDC segment, total sales declined to $3.63 billion in the review period, compared with $6.75 billion and $6.86 billion in the preceding half year and corresponding period of 2019, respectively, due to the temporary suspension of sales to the segment as international travels were grounded.”

 

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