CBN sells $11.49bn to BDCs in 10 months

The Central Bank of Nigeria (CBN) sold a total of $11.49 billion to the Bureaux De Change (BDC) segment of the foreign exchange market between January and October this year, findings by New Telegraph have shown. For instance, the CBN’s recently released economic report for Q3’19 shows that the apex bank sold more forex to authorised dealers, including BDC operators, between July and September this year, compared with the preceding quarter. The report stated: “A total of $10.11 billion was sold by the CBN to authorised dealers in the third quarter of 2019. This represented 37.1 per cent increase, compared with the level in the second quarter of 2019.

“The development, relative to the preceding quarter, reflected mainly, the significant rise in foreign exchange sales to the I&E window, swaps transactions and wholesale forwards in the review quarter. “Of the total, foreign exchange sales to the I&E window, swaps transaction, wholesale forwards intervention, SME intervention, sales to BDCs, interbank sales and SMIS intervention rose above their levels in the preceding quarter by 2,345.14 per cent, 36.1 per cent, 24.3 per cent, 12.5 per cent, 9.3 per cent, 6.9 per cent and 0.7 per cent, respectively, to $2.02 billion, $0.47 billion, $1.50 billion, $0.43 billion, $3.54 billion, $0.33 billion and $1.84 billion, respectively. “Foreign exchange forwards disbursed at maturity recorded no transaction during the period under review,” it added.

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Similarly, in its economic report for October 2019 released last week, the regulator said: “The bank continued to intervene in the foreign exchange market to further sustain improved liquidity and relative stability in the market. Thus, a cumulative sum of $2.79 billion was sold by the bank to authorised dealers in October 2019, compared with $2.80 billion supplied in September 2019.

This indicated a decline of 0.5 per cent and 16.3 per cent, relative to the levels in the preceding month and the end of the corresponding period of 2018, respectively.” Continuing, it stated: “Interbank sales fell by 2.8 per cent to $0.10 billion, in contrast to the increase of 5.8 per cent in the preceding month. BDC sales and swaps transactions, however, rose by 1.0 per cent and 27.9 per cent to $1.07 billion and $0.03 billion, above the preceding month’s levels of $1.06 billion and $0.02 billion, respectively.”

This means that if the $1.07 billion that the apex bank sold to BDCs last month is added to the $3.54 billion it sold to the operators in Q3’19, the regulator sold a total of $4.61 billion to that segment of the forex market between July and October this year. New Telegraph, citing the CBN’s economic report for the first quarter of this year, as well as its economic reports for the months of April, May and June, had earlier reported that the bank sold about $7 billion to the BDC segment of the foreign exchange market in the first six months of 2019. Specifically, in its economic report for Q1’19, the CBN said it sold more forex to authorised dealers, including BDC operators, between January and March this year, compared with the preceding quarter. In the same vein, data obtained from the CBN’s economic reports for April, May and June this year shows that it sold a total of $3.24 billion to BDCs during the period.

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This means that total sales to BDCs in the first half of this year amounted to $6.88 billion. If the figure is added to the $4.61 billion that the banking watchdog sold to that segment of the forex market between July and October, this means that it sold a total of $11.49 billion to the money changers in the first 10 months of this year.

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