The Central Bank of Nigeria (CBN) Monday, June 20, 2016, fulfilled all backlogged foreign exchange demands in one fell swoop as trading commenced under the new guidelines that was announced by Governor Godwin Emefiele last week Wednesday.
At the Nigeria Interbank Foreign Exchange (NIFEX) market Monday, with the CBN participating in spot and forward trading, the reserve bank fulfilled 100 per cent of new forex demands before stunning the market by clearing the backlog of $4.02 billion in the bank’s forward and spot sales. According to the CBN, it sold $532 million on the spot market and $3.487 billion in the forwards market.
The transactions were concluded in the interbank market at rates between N255 and N280 where the naira settled after the bank cleared all arrears, leaving many speculators and dealers burned because many of them had put in bids as high as N382 – $1.
With the development, the global markets will formally adopt N280 as the average benchmarked rate for the naira vs. the dollar going forward in international trading.
THEWILL checks showed that trading was transparent, without volatility and was done in real time like it is done globally.
Confirming developments at the first day of new trading, CBN’s Ag. Director Corporate Communications, Mr. Isaac Okorafor, said Monday night that: “The CBN, in line with its desire to promote a transparent, liquid and efficient market, and to engender market confidence and ensure credible price formation, intervened in the market through special Secondary Market Intervention Sales (SMIS) addressing the issue of the FX demand backlog by clearing $4.02 billion through spot and forward sales.
“This served in no small way to stimulate price discovery, with the determination of a marginal rate of N280/$ through the special SMIS process.
“So we can state to you categorically that the FX demand backlog has now been cleared and behind us for good.”