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Forex: I&E window records $29.6bn turnover in H1’19

By Babajide Komolafe & Elizabeth Adegbesan

THE volume of dollars traded     (turnover) in the Investors and Exporters (I&E) window of the foreign exchange market dropped marginally to $29.62 billion in the first half of 2019 (H1’19).

Financial Vanguard  analysis of daily transactions in the window as published by FMDQ showed a year-on-year decline of 0.3 percent to $29.62 billion in H1’19 from $29.7 billion in H1’18. The analysis, however, showed a sharp decline in turnover in the Q2’19 when compared to turnover recorded in Q1’19.

Forex

Turnover in the window fell by 33 percent, quarter-on-quarter to $11.9 billion in  the second quarter of 2019 (Q2’19) from $17.72 billion in the first quarter of 2019 ( Q1’19). On monthly basis, the turnover dropped by 22 percent to $3.2 billion in June  from $4.1 billion in May.

FAAC disbursements to FG, states, LG drop to N1.93trn (Opens in a new browser tab)

This represents the fourth consecutive monthly decline in the volume of dollars traded (turnover) in the window since February. Monthly turnover in the window rose by 204 percent to $9.13 billion in February, courtesy of increased inflow from foreign portfolio investors (FPIs). But it  dropped by 22 percent to $7.48 billion in March from where it nosedived to $4.6 billion in April and $4.1 billion in May.

Hence, the 33 percent decline in monthly turnover in June suggests continuous slowdown in dollar inflow from FPIs.

Financial Vanguard analysis of weekly turnover in the window for June showed that $330.61 million was traded in first week of June. Turnover rose by 153 percent to $837.53 million in the second week and down by 8.0 percent to $773.52 million in the third week. The turnover, however, rose in the fourth week as turnover increased by 29 percent to $998.5 million.

However, the naira depreciated by 12 kobo in the I&E window in June as the indicative exchange rate for the window  rose to N360.74 per dollar on  June 28th  from N360.76 per dollar on June 3.

Naira depreciates as CBN injects $452m

Meanwhile, the naira last week depreciated by 25 kobo in the I&E window, even as the Central Bank of Nigeria (CBN) injected $452.04 million into the interbank foreign exchange market. Data from FMDQ showed that that the I&E indicative exchange rate rose to N360.74 per dollar last week from N360.49 per dollar the previous week. This translates to 25 kobo depreciation of the naira.

In a bid to sustain its intervention in the foreign exchange market, the CBN increased its weekly intervention to $252.04 million. On Tuesday the apex bank injected $210 million with $100 million allocated to the wholesale segment, $55 million to the Small and Medium Enterprises (SME) window, and $55 million for invisible transactions.

This was complemented by injection of another $242.04 million and CNY 32.3 million on Friday.

In a statement announcing the additional injection on Friday, CBN’s Director of Corporate Communication Department, Mr. Isaac Okoroafor, said:  “In continuation of its intervention in the inter-bank foreign exchange market, the Central Bank of Nigeria (CBN) on Friday, June 28, 2019, injected the sum of $242.04million into the retail Secondary Market Intervention Sales (SMIS) and CNY 32.3million in the spot and short tenored forwards segment of the inter-bank foreign market.”

He  disclosed that the intervention was for requests in the agricultural and raw materials sectors, adding that the Chinese Yuan, on the other hand, was for Renminbi-denominated Letters of Credit.

Okorafor further expressed satisfaction over the stability of the foreign exchange which according to him, was largely due to sustained intervention by the Bank. He assured that the apex Bank Management would remain committed to ensuring that all the sectors of the forex market continue to enjoy access to the needed foreign exchange.

He reiterated that with improved inflow of foreign exchange, the exchange rate had remained stable around N360/$1 for the past 27 months.

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