CBN pumps $262.5 million into interbank forex market

CBN Governor, Godwin Emefiele has cut lending rate to 12.5%
CBN Governor, Godwin Emefiele
Godwin Emefiele, CBN Governor has pumped $262.5m into the currency market

Central Bank of Nigeria, CBN, said on Friday it had injected $262.5 million into the interbank foreign exchange market, extending efforts to improve liquidity and alleviate dollar shortages.

The bank said in a statement it had released the funds for use by businesses in the agricultural and petroleum sectors as well as airlines.

The bank said it would continue to intervene in the foreign exchange market to sustain liquidity.

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The evolution of the foreign exchange market in Nigeria up to its present state was influenced by a number of factors such as the changing pattern of international trade, institutional changes in the economy and structural shifts in production.

The Nigerian foreign exchange market has witnessed tremendous changes.

The Second-tier Foreign Exchange Market (SFEM) was introduced in September, 1986, the unified official market in 1987, the autonomous Foreign Exchange Market (AFEM) in 1995, and the Inter-bank Foreign Exchange Market (IFEM) in 1999.

Bureaux de Change were licensed in 1989 to accord access to small users of foreign exchange and enlarge the officially recognised foreign exchange market.

Exchange rates in the Bureaux de Change are market determined. A parallel market for foreign exchange has been in existence since the exchange control era.

It has been established that scarcity in the official sector and bureaucratic procedures necessitated the growth and development of the parallel market.

Click here to view CBN’s foreign exchange rates