CBN Sells $9.4 Billion Forex In 6 Months

The Central Bank of Nigeria sold a total of $9.4 billion in forex in the foreign exchange market first 6 months of 2022. This compares to $5.8 billion sold in the first half of 2021.

This is according to data released by the apex bank in its half-yearly economic report.

Nigeria’s central bank intervenes in the foreign exchange market via spot and forward sales at the investors and exporter windows, directly to SMEs and via its Small and Medium Enterprises (SMEs) and inter-bank Secondary Market Intervention Sales (SMIS).

The central bank sells forex as part of its policy of intervention in the foreign exchange market.

• It does this to control the price of forex by selling more when it needs a stronger naira or purchase when it believes the naira is strong.
• However, a higher forex intervention by the central bank suggest the apex bank is burning through Nigeria’s reserves which may have been used for other purposes.
• It also reveals how much liquidity is in the official forex market which helps determine if the parallel market prices are over depreciated or needs further devaluing.

According to the apex bank, it sold a total of $9.4 billion in first half of the year with 47.5% of it or $4.38 billion sold via the sport market. The means it sold at the prevailing price on the day.

• Another $4.3 billion was sold via forward sales making up 52% of total sales.
• The bank also revealed the breakdown of the spot sales included $2.07 billion sold at the Investors’ and Exporters’ (I&E) window, $856.81 million for invisibles,
• Another $834.74 million was sold at the Small and Medium Enterprises (SMEs) and inter-bank Secondary Market Intervention Sales (SMIS) accounted for US$622.92 million