CBN, orders banks to give key fact statement
The CBN Governor, Godwin Emefiele

The Central Bank of Nigeria sold a whopping $36.6 billion in forex in 2018 according to a report released during the week on its website. This compares to $15.8 billion sold in 2017, a whopping 130% rise.

The report, 2018 Activity report, is aimed at “informing the public of the measures taken by the Department to implement the decisions of the CBN and its Monetary Policy Committee towards the achievement of price and financial system stability.”

Key numbers: The CBN explained the breakdown of the $36.6 billion as $25.6 billion for spot sales and $11 billion in forward transactions.

  • Included in the spot sale was $8.2 billion sold in the I&E window.
  • The I&E window is where investors come to buy and sell forex and its the closest to a market with an exchange rate that floats.
  • Total sales in 2017 were $15.8 billion lower than spot sales recorded in 2018. The bank reported that spot sales for 2017 were just $3.4 billion compared to $25.6 billion in 2018 alone.
  • Net sales (sum of forex sold and bought by the CBN) was $17.8 billion in 2018 compared to $9.7 billion in 2017

Numbers explained: The higher sales recorded in 2018 suggest there was more demand for forex in 2018 compared to 2017. Thus, to keep the exchange rate stable and speculators at bay, the CBN had to increase its defense of the naira by selling more dollars. This is further buttressed by the more than 8 folds increase in spot sales with most of it targeted at the I&E window where foreign investors trade.

By burning through reserves, the CBN sacrifices forex savings for naira stability hoping that this will help drive down the inflation rate. Critics believe this might be work in the short term but it is detrimental in the long run when we factor in the opportunity cost of burning out reserves.

CBN’s explanation: “The increased volume of transactions in 2018 was attributable largely to the Bank’s foreign exchange policy and its management, coupled with the improvement in the levels of foreign reserves during the year.”

The exchange rate debacle: Most analysts we have spoken to believe the exchange rate is somewhat overvalued at N365. They point to frequent interventions in the FX market by the CBN as one of such artificial dynamics that inhibits price discovery. The more CBN intervenes to stifle demand the better the chances of the naira holding sway at its current price.

The upshots: Now that the presidential elections are over and the Central Bank Governor guaranteed another term of 5 years, the focus will not be channeled at how the CBN plans to manage the exchange rate. Will it be more of the same or a change of course. Rumours that the CBN might devalue something this year will likely persist. Some believe it is just a matter of time particularly if oil price fails to recover past the $70 mark.

Coronation Research


  1. I do think it is more than you said .What I saw the cbn did had a shift in forex monetary.They did start to intervene actively, than you said,THEY SHIFT IN ALLOWING THE NAIRA IN FLOATING,and I think they devised at least 3 major forex monetary did some Nigerian bank,they all raised some dollar bond.The Nigerian did not raised any forex bond before
    Secondly,in all I have been reading.i am curious about this one they raised in America and Britain.nairametric have been silent about them ,even by the ministry of finance.i means this diaspora dollar bond,and the one that was oversubscribed in London,thirdly some Nigerian used some foreign broker in trading forex.
    last year and in 2017,some suspect the naira will reaches 1000 naira to I dollar,so I feel they implement a new forex is possible that the naira may appreciate in a major way,if not this year,it will appreciate next year,we are looking forward for the present budget to be passed,or maybe,how much Nigerian banks is holding or spending in forex.

  2. Hello Team Nairametrics.

    Here’s a feedback from me. I don’t seem to get an email when one of my replies has been responded to. Even though I ticked the “notify via email” option on the website.



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