The Central Bank of Nigeria continued what has now become a trend on Monday, with another intervention in the Foreign Exchange Market, or Forex as it’s more commonly known. The country’s central bank this time pumped $195 million into the Forex market – which is one of its largest contributions yet.
Breaking down its contributions, the CBN’s Acting Director of Corporate Communications Isaac Okorafor confirmed that the bank had offered $100 million to the wholesale segment of the market, with a further $50 million going to the Small and Medium Enterprises segment. Meanwhile, the CBN confirmed that it had allocated $45 million was allocated to tuition fees, medical payments and Basic Travel Allowance.
Okorafor went on to justify Nigeria’s intervention in the international currency exchange market, saying that its latest instalment of $195 million would ensure that the country’s naira currency is able to sustain itself against other global currencies, including crucially, the U.S. dollar, which the Nigerian government has earmarked as a target that it’s keen to compete with on the international currency stage.
Nigeria’s boost of the international currency exchange is undeniably good news for Forex traders. However, it also means that taking advantage of advanced Forex trading strategies is now more important than ever. Click this link to learn Forex trading strategies – and start taking advantage of the CBN’s recent intervention.
That being said, it isn’t evident that the Central Bank of Nigeria’s intervention in the Forex market has necessarily been a good move for the country’s currency – the Naira. The currency, yesterday, diminished marginally to N360/$1 in the Investor and Exporter (I&E) Foreign Exchange segment of the market. That fall has left many in Nigeria questioning whether or not the government’s decision to continue pumping investment into the Forex market is a worthwhile one or not.
Isaac Okorafor has served as the Central Bank of Nigeria’s Acting Director of Corporate Communications since early 2016, whilst continuing in his role as head of the bank’s External Communication Division. During his time as the Acting Director of Corporate Communications, Okorafor has been the public face of regular interventions mad by Nigeria in the international currency exchange market.
National banks making interventions in the foreign exchange isn’t uncommon, especially considering its significance as a decentralized global market, providing a platform for all of the world’s currencies to trade. Because of this, the Forex market is the most liquid of its kind in the world, with average daily trading exceeding $5 trillion. That’s a whole different level of the world’s various stock markets.
Foreign currency reserves are especially useful in assisting a country in dealing with a currency crisis. That’s why many nations keep considerable Forex reserves, including China which has by far the largest reserve assets at over $3 billion. Meanwhile, the likes of Russia and the European Union also keep significant Forex reserves. Surprisingly, however, the United States only keeps foreign currency reserves of around $119.6 billion, which is considerably less than its foreign counterparts.
Either way, Nigeria looks to make itself a key player on the Forex market through it’s various recent interventions that have seen the country’s national bank pump money into the market.