CBN defends naira with $5.3bn

The Central Bank of Nigeria sold $5.3 billion to defend the naira in October even as foreign exchange inflow into the economy fell by 5.4 percent during the month.

Disclosing this in its economic report for October, the CBN said that the decline in foreign exchange inflow was driven by 21.3 percent decline in receipts from crude oil exports.

The report revealed the impact of the decline in crude oil prices on the nation’s economy and especially on the foreign exchange market.

The report stated, “Provisional data indicated that foreign exchange inflow and outflow through the CBN was $3.23 billion and $5.30 billion, respectively, in the review month, resulting in a net outflow of $2.07 billion, compared with the net outflow of $0.02 billion in the preceding month. Relative to the level in the preceding month, inflow fell by 23.7 per cent, but indicated a growth of 1.7 per cent above the level in the corresponding period of 2013. The development, relative to the preceding month was attributed to the decline in crude oil prices, the absence of foreign exchange swaps and decline in non-oil receipts during the month under review.

“Foreign exchange outflow through the CBN, however, increased by 24.7 and 66.7 per cent to US$5.30 above the levels in the preceding month and the corresponding period of 2013, respectively. The development was attributed, largely, to increased foreign exchange sales at the rDAS, Bureau-de-Change (BDC) and interbank segments of the market during the review period.

 “Provisional data on aggregate foreign exchange flows through the economy indicated that total inflow was $14.09 billion, representing a decrease of 5.4 below the level at the end of the preceding month. It, however, increased by 26.9 per cent above the level at the end of the corresponding period of 2013. The development, relative to the preceding month was driven, mainly, by a decline of 21.3 per cent in receipts from crude oil exports. Of the total inflows, receipts through the CBN and autonomous sources accounted for 22.9 and 77.1 per cent, respectively.

“Non-oil public sector inflow, at $0.73 billion (5.2 per cent of the total), was down by 30.9 per cent below the level in the preceding month but rose by 58.4 per cent above the level in the corresponding month of 2013. Autonomous inflow, which accounted for 77.1 per cent of the total, increased by 1.9 per cent above the level in the preceding month.

“At $5.40 billion, aggregate foreign exchange outflow from the economy increased by 17.2 and 66.9 per cent above the levels in the preceding month and the corresponding month of 2013, respectively. Thus, foreign exchange flows through the economy resulted in a net inflow of $8.69 billion in the review month, compared with $10.28 billion and $7.86 billion in the preceding month and the corresponding month of 2013, respectively.”