Nigerian Central Bank Infuses $210m into Forex Market

Jacob Friedman

The Central Bank of Nigeria announced that it has injected USD $210m into its interbank forex market. The bank said that it was taking this step to improve foreign exchange liquidity and ease the shortage of the US dollar.

In a statement, the bank provided details of how the funds were allocated. It said that USD $100m was for the wholesale market, USD $55m was for customers who require forex for personal or business use, medical costs and tuition fees, and the remaining USD $55m was reserved for SMEs.

Isaac Okorafor, Acting Director of Corporate Communications at the Central Bank of Nigeria, said that presently the bank was happy with the way the naira was performing. It was stable against the US dollar as well as other major currencies.

However, he tried to allay fears by stating that the central bank would continue to get involved in the interbank forex market according to the bank’s policy and this was to ensure the forex market maintains its stability and there is adequate liquidity.

Okorafor also pointed out that the measures taken by the Central Bank of Nigeria when it comes to forex management have significantly helped in reducing Nigeria’s import costs while working to boost the nation’s foreign exchange reserves.

He went on to add that on Wednesday 15 August 2018 the Central Bank of Nigeria would meet stakeholders in Abuja, the capital of Nigeria, and other neighbouring cities to provide more information and details about the Currency Swap Agreement the bank has signed with the People’s Bank of China.

The Nigerian Central Bank signed the agreement on 27 April 2018.

In the trading session on Tuesday 14 August 2018, the Naira was trading for N360 per USD at the bureau de change. However, the trading rate fell later in the day, and the Naira was being traded at N306.05 per USD while the official exchange rate was N306 per USD.

The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) announced that it had provided $373m to farmers over the last one year. The organisation said that the funds would help farmers increase the production of crops that Nigeria exports.

Aliyu Abdulhameed, Managing Director for NIRSAL, said that most small-holder farmers had benefitted from the disbursal. These farmers were involved in cultivating oil palm, corn, cassava, cotton and rice.

NIRSAL was established in 2012, and has been working with banks ever since to ensure farmers enjoy up to 75% loans, said Abdulhameed.

He went on to say that if the average yield by small-holder farmers was about four tonnes per hectare, it would result in a total yield of around 16 million tonnes

Taking into consideration the infusion of funds to benefit small-hold farmers, Abdulhameed said that it would help the nation to boost its revenue. The export of the crops being cultivated by these farmers is expected to yield close to NGN ₦1.6tn by the end of 2018. This amount equates to USD $4.4bn.

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Jacob Friedman
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