The Central Bank of Nigeria sold a total of $10.18bn at the Wholesale Dutch Auction System in the first half of this year, a report has revealed.

The report, which was presented by the Executive Secretary and Chief Executive Officer, Financial Market Dealers Association, Mr. Wale Abe, at a round-table conference in Lagos on Wednesday, showed that the apex bank also offered $10.45bn within the period.

The CBN had sold and offered a total value of $14.85bn at the WDAS in the first quarter of last year. Forex sales were less than forex offered by $285m by half- year 2012. Half year WDAS forex supply for 2011 was $14.85bn, as against $10.45bn in 2012, representing a decrease of 29.70 per cent.

He said, “On the average the gap between rates at the CBN and the parallel market widen with about N6 during the period. Generally, the naira appreciated more against the dollar in March and April, but depreciated more between January and February; and between May and June at the official market”

The CBN sold a total of $2.4bn in June, higher than the $1.62bn and $1.02bn in May and April thereby preventing a free fall of the naira. The implication of increased forex sales by the CBN is the 2.4 per cent decline in the external reserves to $36.8bn in June from $37.7bn in May.”

According to the money market analyst, forex supply via WDAS influences movements in rates the most.

He added that forex sales from oil majors actually assisted in maintaining the value of the naira.

On the outlook for the second half of the year, Abe said, “Given the trend in core inflation, the CBN may change from its neutral posture in the second half of the year and increase the official interest rate. Naira may be allowed to float should oil prices decline faster than expected even when the surge in inflationary pressures may make this necessary.”

He noted that the relatively stable exchange rate should keep imported inflation under control while domestic inflationary pressures were likely to mount.

Source: Punch/ Ademola Alawiye