The Central Bank of Nigeria (CBN) sold a total of $10.308 billion in the foreign exchange (FX) market in the first six months of 2020.
The banking sector regulator disclosed this in its ‘Half-year Activity Report,’ as of June 2020, posted on its website yesterday.
It explained that the continued intervention was to cushion demand pressures and ensure exchange rate stability.
A breakdown of the total amount of FX sold by the CBN in the period under review comprised $5.056 billion at the Investors and Exporters’ window; $1.198 billion at the interbank spot, $570.00 million for SMEs, $312 million for invisibles, while forwards sales were $3,170.97 million.
On the other hand, the Bank purchased a total of $2.211 million, which resulted in a net sale of $8.097 billion. Also, the report revealed that the sum of $5.425 billion matured at the forwards segment, while $2.505 billion was outstanding at end-June 2020.
In comparison with the first half of 2019, a total of $8.471 billion was sold at the foreign exchange market. This comprised $2.161 billion at the inter-bank spot, $810 million for SMEs, $550.70 million for invisibles, $294.59 million at the I & E window, while forwards sales were $4.654 billion.
But the CBN purchased $9.552 billion, which resulted in a net sale of $1.081 billion.
“In the first half of 2020, the foreign exchange market operations were largely impacted by the decline in crude oil demand, reduced accretion to the reserves due to the drop in crude oil prices and foreign portfolio capital reversals.
:In addition, global COVID-19 lockdowns contributed to the slowdown in economic activities. In response, the Bank took deliberate efforts at sustaining price stability and preserving foreign reserve levels,” it stated.
Also, it stated that the total treasury bills issued and allotted in the period under review was N1.516 trillion apiece, indicating an increase of N41.84 billion or 2.84 per cent above N1.474 trillion apiece in the corresponding period of 2019.
Total public subscriptions stood at N2.904 trillion, compared to N4.154 trillion in the corresponding period of 2019.
“The decline in public subscription was traceable to the lower yield on NTBs. The lower yields were attributable to the FGN thrust to reduce its cost of borrowing coupled with the bifurcation of OMO Bills and NTBs in October 2019, which led to freeing liquidity from OMO to NTBs,” it stated.
“Total request for repurchase (repo) transactions for the first half of 2020 amounted to N661.03 billion, while the applicable interest rates ranged from 18.00 to 19.00 per cent for the 4- to 90-day tenors, from January to May 27, 2020, and 17.00 to 18.00 per cent from May 28 to June 2020.