Central Bank of Nigeria (CBN) boosts forex liquidity with $280m to SMEs, BDCs, invisibles
… introduces Form Q for improve access by SMEs
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.
Also, the apex bank commenced its weekly $20,000 sales to licensed Bureaux De Change and further announced the opening of bids for offering $100 million wholesale 7-45 days forwards through 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 $280 million into the market.
The nation’s currency on Tuesday appreciated by N5 as it closed at the rate of N400/$ at the black market. This represents 1.23 percent higher than N405 per dollar traded the previous day.
Early Tuesday, the local currency was quoted at N407 in Apapa and N405 in Festac before closing at N400/$.
At the interbank spot foreign exchange market, the local currency strengthened marginally by 0.03 percent to close at N306/$ on Tuesday from N306.05k/$, data from the FMDQ showed.
Isaac Okorafor, CBN spokesman, 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 were allowed to purchase $20,000 per quarter on this arrangement.
He restated that the new form, which must be completed by all SME applicants, required the applicant to fill the form with a supporting application letter as well as beneficiary invoice and bank wire transfer.
According to Okorafor, 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 was 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 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 CBN spokesman warned that the CBN would neither tolerate unscrupulous actions nor hesitate to bring serious sanctions on offenders, be they banks or their staff.