The Central Bank of Nigeria, CBN, is set to settle OTC FX Futures contract of about $270.6 million on the interbank market this Wednesday, October 26.
The transaction to be settled on the FMDQ OTC Securities Exchange would be the fourth futures contract to mature since the introduction of the flexible FX regime.
In a bid to meet part of the accumulated demand for foreign exchange by sectors of the economy, the apex bank had last week allocated $314 million to Nigerian banks for onward sale to their customers through Special Secondary Market Intervention Retail Sales, SMIS.
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, a CBN source revealed.
The source 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.
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.
In fulfilment of its pledge to fund forward sales under the flexible FX regime, the CBN also guaranteed letters of credit (LCs) for importers to ship in required goods.
A statement from the acting Director, Corporate Communications Department, CBN, Mr. Isaac Okorafor had explained that the move by the CBN to settle the 60-day forward sales would further ease pressure on the naira and improve market liquidity.
