In an effort to meet part of the pent up demand for foreign exchange by critical sectors of the economy, the Central Bank of Nigeria (CBN) yesterday allocated $314 million to Nigerian banks for onward sale to their customers through Special Secondary Market Intervention Retail Sales (SMIS).
According to a CBN source, the intervention, which was a sixty-day forwards sale, was aimed specifically at meeting the FX payment of matured obligations for the importation of agriculture and industrial raw materials, machineries and equipment as well as spare parts and ticket sale remittances for airlines.
He said in order to ensure that these sectors continue to enjoy the support of the banking system in sourcing raw materials and machinery the chief executives of deposit money banks (DMBs) signed undertakings to open new letters of credit (LCs) equivalent to the amount of forwards receive for each of the sectors.
“Therefore, this round of sales was meant to meet both matured obligations and finance new trade LCs,” the senior CBN official informed THISDAY.
At the close of the intervention, he said the CBN received valid application (that is those that met the criteria stipulated in the circular for the auction) amounting to $814,208,535.82. Of this amount, it intervened with the sum of $313,916,711.09.
A sectoral breakdown showed that total demand from the agriculture sector stood at $31,941,640.73, of which 61.73 per cent, or $19,718,153.67 was met by the CBN.
Total demand by airlines was $216,738,717.57, of which 31.91 per cent, or $69,164,224.83 was met; demand for machinery stood at $167,638,045.08, of which 65.09 per cent, or $109,117,686.71 was met; and demand for raw materials of $397,890,132.44, of which 29.13 per cent, or $115,916,711.09 was met.
At the close of trading yesterday, the spot rate of the naira rose to N304.75 to dollar, from $319.75 from the previous day.
On the parallel market, the naira remained stable, selling at N454 to dollar.