By Sandra Adesiyan
In an effort to keep the Naira from crashing further the Central Bank of Nigeria(CbN) pumped $2.1 billion to the Investors and Exporters (I&E) window of the foreign exchange market in the first seven months of 2021.
The amount was an increased by 238 percent when compared with the $621.1 million injected to defend it in the same window in in the corresponding period of 2020 (7mths-2020).
It also represented a 47 percent increase when compared with the $1.43 billion injected in the first 7 months of 2019.
These figures were obtained from CBN’s monthly economic report published on its website.
According to CBN data, the highest amount injected this year was $474.65 million in April while the lowest amount of $195.91 million was recorded in June.
While the intervention helped keep Naira hovering around N412 to 414, it came at a cost of depleting reserves that was replenished with debts.
You will recall that last month, Vice President Yemi Osinbajo called on the Central Bank of Nigeria to allow market forces control the exchange rate.
He said: The real issue confronting the economy on this matter is how to improve the supply of foreign exchange, but this will not happen if we do not allow mechanisms like the Importers and Exporters window to work. If we allow this market mechanism to work as intended, we will find that the Naira will appreciate against the dollar as we restore confidence in the system.”
Although CBN had adopted the flexible I & E window as its official exchange rate, it remained the single source of dollar supply thereby having a significant influence on how the market turns out daily.