Boost in dollar supply after CBN halted forex restrictions on 43 items

Dollars increased at the foreign exchange (forex) market as liquidity at the investors and exporters window increased to $407.7 million following the decision of the Central Bank of Nigeria to halt restrictions on forex ban on 43 items. This signalled a significant increase of 1,302.8% from $29.06 million in forex traded by the official market’s authorised dealers and their clients before the announcement. Recall the CBN recently announced it will be lifting the ban on the importation of 43 items which were earlier restricted from accessing foreign exchange on its official platform. The apex bank disclosed this in a statement signed by the Director, Corporate Communications, Isa AbdulMumin.

The statement read “Importers of all the 43 items previously restricted by the 2015 circular referenced TED/FEM/FPC/GEN/01/010, and its addendums are now allowed to purchase foreign exchange in the Nigerian foreign exchange market. As part of its responsibility to ensure price stability, the CBN will boost liquidity in the Nigerian Foreign Exchange Market by interventions from time to time. As market liquidity improves, these CBN interventions will gradually decrease,” the apex bank added.

According to a Lagos-based investment institution, Chapel Hill Denham, liquidity at the investors and exporters window — the official foreign exchange market — increased more than five-fold to $407.7 million after the central bank’s announcement. Speaking further, the head of research at Chapel Hill Denham, Tajudeen Ibrahim linked the increase in dollar supply to activities from sources outside the CBN but added that he expects the apex bank’s supply to increase.