As part of continued effort in achieving official and parallel market rate convergence, the Central Bank of Nigeria (CBN) has sold a total sum of $2.64 billion to authorised dealers in May 2017, its latest economic report has revealed.
The apex bank, in its economy report for May, which was obtained by our correspondent over the weekend, showed that 70.8 per cent and 106.1 per cent increase above the levels in the preceding month and the corresponding period of 2016, respectively.
This development, however, attributed to the increase in inter-bank sales, matured forwards contracts and Bureau De Change (BDC) sales during the period under review.
According to the CBN’s report, “of the aggregate sales, forwards contracts disbursed at maturity were valued at $1.85 billion or 70.1 per cent of the total, while inter-bank sales amounted to $0.65 billion or 24.7 per cent. The balance of $0.14 billion or 5.2 per cent of the total was accounted for by sales to BDC.
“The Bank sustained its effort at ensuring exchange rate stability through interventions and implementation of policies to address supply bottlenecks and enhance liquidity in the foreign exchange market”, it stated.
Consequently, there was improvement in the exchange rate of the naira to major international currencies in the review period. The average exchange rate of the naira at the inter-bank segment, at N305.54 per US dollar, appreciated by 0.2 per cent relative to the level in the preceding month, but indicated a 35.5 per cent depreciation, below the level in the corresponding period of 2016.
Also, at the BDC segment of the market, the naira appreciated by 0.5 per cent, on a month-on-month basis, to N384.48 per US dollar, but indicated a 12.4 per cent depreciation relative to the rate in the corresponding period of 2016
As a result, the premium between the average inter-bank and BDC rates fell by 0.4 percentage point to 25.8 per cent in May 2017 below the level in April 2017.
The report said the external sector weakened in May 2017 due to the decline in crude oil prices from an average of $52.90 per barrel in April 2017 to $51.04 per barrel.
It stated that increase in shale oil production in the United States and supply by non-members of the Organisation of Petroleum Exporting Countries (OPEC) both contributed to the fall in crude oil prices.
Consequently, foreign exchange inflow through the CBN, at $2.26 billion, declined by 21.4 per cent below the level in the preceding month, but was 27 per cent above the level in the corresponding period of 2016. The decline relative to the level in the preceding month was driven by fall in both oil and non-oil proceeds.
“Aggregate outflow of foreign exchange through the Bank at $3.02 billion, increased by 39.6 and 78.7 per cent above $2.16 billion and $1.69 billion in the preceding month and the corresponding period of 2016.
“The development was driven by outflow through foreign exchange special payment, drawings on letters of credit, inter-bank utilization and external debt service. Overall, the net outflow through the Bank in the month of May 2017 was $0.76 billion, in contrast to a net inflow of $0.71 billion and $0.09 billion recorded in the preceding month and the corresponding period of 2016.
“Aggregate foreign exchange inflow into the economy amounted to $5.78 billion; representing 5.0 per cent decline below the level in the preceding month, but showed an increase of 30.8 per cent above the level in the corresponding period of 2016. The development relative to the preceding month reflected the fall in inflow through the Bank. Inflow through autonomous sources and the Bank were $3.52 billion and US$2.26 billion and, accounted for 60.9 per cent and 39.1 per cent of the total, respectively.
“Non-oil sector inflow, at $1.39 billion (23.1 per cent of the total), fell by 30.2 per cent, below the level in the preceding month. Autonomous inflow, rose by 9.8 per cent, above the level in April 2017.
“Aggregate foreign exchange outflow from the economy, at $3.18 billion, rose by 38.8 per cent and 70.4 per cent, above the levels in the preceding month and the corresponding month of 2016, respectively.
“Thus, foreign exchange flows through the economy, resulted in a net inflow of $2.60 billion in the review month, compared with $3.79 billion and $2.55 billion, in April 2017 and the corresponding month of 2016, respectively”, the apex’s bank economic report added.