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CBN defended naira with $26.6bn in 2013 – Report

By on January 8, 2014

In a bid to save the naira from devaluation last year, the Central Bank of Nigeria defended the currency with approximately $26.6bn from the nation’s external reserves; findings by our correspondent have shown.

Information obtained from the CBN website on Monday revealed that the bank sold about $26.6bn to currency dealers in 94 Foreign Exchange Dutch Auctions between January and December 2013.

According to the data, the central bank sold about $19.8bn to currency dealers in 72 auctions through the Wholesale Dutch Auction System between January and September last year, while it offered $6.8bn to the dealers in 22 auctions through the Retail Dutch Auction System between October and December.

The CBN had on October 2 last year replaced the WDAS with the RDAS because of the ineffectiveness of the former in order to address hitches in the foreign exchange market.

The data showed that the central bank sold the highest amount of dollar in the month of July, offering $3.3bn; while it sold $833,501,279 in January, the least for the year

The bank also offered to the public $2.8bn in the month of September, making it the second highest in the year, while it offered a total of $2.38bn in the month of October.

The CBN statistics showed that $1.2bn was sold in February, while $1.9bn was sold in March. It further showed that the central bank sold $2.4bn in November and $1.99bn in December.

However, the BGL Plc, an independent firm, estimated that the CBN sold about $25.591bn during at its bi-weekly auctions in 2013.

The amount ranged from $12m (in the early part of the year) to $400m towards the end of the year.

The lower demand at the early part of the year was due to high foreign portfolio inflows into the country for investment in bonds and later equities, analysts  said.

Other analysts linked the trend to the fact that the naira did not experience much pressure during the early part of last year compared to the later period.

According to the CBN, the official exchange rate in January of last year was N155.77 to the dollar, while the rate currently is N155.70 to the dollar.

Industry observers said although there was a little volatility during the year, the rate was relatively stable.

A note by the BGL reads, “The CBN defence of the naira in 2013 was successful although to the detriment of the external reserves. Foreign investors were sufficiently protected, while genuine importers also got a good bargain from the CBN.”

The reserves started last year at a little above $44bn and rose to $48bn in May. They, however, closed the year at $43.6bn on December 31.

 

 

[Punch]