The Nation Newspaper

Tag: Dollar

  • Naira crashes again in major market segments

    Naira crashes again in major market segments

    The naira on Friday depreciated further against the dollar, pound sterling and the euro in all segments of the market.

    At the parallel market, the naira shed three points to exchange at N378 to the dollar at the close of trading on Friday afternoon, against N375 it closed with on Thursday, representing a depreciation of 0.8 per cent.

    It also weakened further against the pound sterling and the euro as it exchanged at N487 and N405 respectively against N485 and N405 it traded respectively on Thursday.

    However, the Nigerian currency maintained losses at N375, N485 and N405 respectively against the dollar, pound sterling and the euro at the Bureau de Change segment of the market.

    The naira also performed poorly at the interbank window as it crashed further to N307.98 to a dollar from N295.38 it traded on Thursday.

    Currency traders expressed worry over the extension of losses of the naira against other currencies in nearly all the segments of the foreign exchange market.

    They, however, called on the Central Bank of Nigeria to urgently intervene in the market to save the naira from further crash.

    It would be recalled that the CBN, on June 20, began implementation of flexible exchange rate policy which many analysts hailed as the magic wand that would shore up the value of the naira.

    Four weeks into its implementation, the naira appeared lonely in the face of its trial by macro-economic elements as forces beyond it seemed bent on prolonging its trial.

    Stakeholders count on the Monetary Policy Committee meeting of the Central Bank of Nigeria holding next week to pull the right monetary policy lever needed to salvage the naira.

  • Naira weakens, exchanges at N377 to dollar

    Naira weakens, exchanges at N377 to dollar

    •Nigeria hosts African Central Bank Governors’meeting

    The naira yesterday exchanged at N377 to dollar in the parallel market, weaker than N373 on Wednesday after the Central Bank of Nigeria (CBN) failed to intervene in the market.

    At the interbank rate, the currency traded at N309 to dollar at noon, but later recovered to close at 292.40 on thin trades. The interbank market traded a total of $7.27 million.

    The naira fell to an all-time low on dollar supply shortages.

    Traders were expecting the central bank to intervene to ease dollar shortages, but that did not happen. The bank has not intervened for most of this week, they said. Instead it was mopping up naira liquidity to support the currency.

    “Now that the market has adjusted upwards it seems people are comfortable and that’s why we are seeing some trades,” one trader told Reuters.

    Meanwhile, this year’s Annual Meetings of the Association of African Central Banks (AACB) have been scheduled to hold in Abuja from  August 15 to 19.

    The meeting of the Assembly of Governors will be preceded by a technical committee and bureau meetings from August 15-17. On August 18, it would a  symposium. It has as theme: “Unwinding unconventional monetary policies: Implications for monetary policy and financial stability in Africa.”

    The event scheduled for the CBN Head Office, Central Area, Abuja will be declared open by President Muhammadu Buhari, while the keynote address will be delivered by Prof. Mario Draghi, the Governor, European Central Bank.

    Speakers include former Kenyan Central Bank, Prof. Njuguna Ndung’u,  and  his Mexican counterpart, Dr. Augustin Carstens.

    The AACB was introduced on May 25, 1963, at the Summit Conference of African Heads of State and Government in Addis Ababa, Ethiopia.

    African Heads of State and Government agreed to set up an Economic Committee to study monetary and financial issues with governments and in consultation with the Economic Commission for Africa (ECA).

  • Naira falls as holiday makers go for dollar

    Naira falls as holiday makers go for dollar

    •System failure stalls N120b debt auction

    Huge dollar demand by Nigerians going for summer vacations abroad is putting pressure on the naira, which yesterday exchanged at N357 against the greenback.

    The naira was trading at 357 to the dollar on the parallel market, weaker than 352 per dollar last week, but it has remained broadly stable at 282/283 to the dollar on the interbank market.

    Traders said the Central Bank of Nigeria (CBN) was the main supplier of dollars in the market, hence the stability in the official rate, which is expected to continue into next week.

    The CBN removed the naira peg last month, but the parallel market is still thriving as the regulator maintained some restrictions on access to dollars in the official market by firms and individuals.

    The CBN had on June 15, unveiled the broad framework and guidelines of the Flexible Exchange Rate Inter-bank Market during which it restored the automatic adjustment mechanism of the exchange rate with the re-introduction of a flexible inter-bank exchange rate market.

    The CBN said the workings of this market will be consistent with its objectives of enhancing efficiency and facilitating a liquid and transparent Foreign Exchange Market.

    The apex bank also set rules for the operation of Forex Primary Dealership (FXPD). The FXPDs qualified lenders are registered authorised dealers designated to deal with the CBN on large trade sizes on a two-way quote basis. They will serve as the bulk traders dealing directly with the CBN on forex matters.

    The CBN guideline for the FXPD stipulated that to qualify as an FXPD, a bank is required to have a minimum of N400 billion in total foreign currency assets; minimum shareholders fund unimpaired by losses of at least N200 billion and minimum Liquidity Ratio of 40 per cent.

    Meanwhile, plans by the Debt Management Office (DMO) to raise N120 billion ($425 million) in bond maturing 2021, 2026 and 2036 on Wednesday was stalled by system glitch at the CBN, but the auction is currently ongoing, an official of the Debt Management Office said yesterday.

    In a public notice on Monday, the DMO said it will raise N40 billion at par in 2021 bond, while also raising N40 billion apiece in the 2026 and 2036 maturing bonds at the auction.

    “There was a system glitch at the CBN, which stalled the issuance on Wednesday, but the process is presently ongoing and will soon close,” DMO added.

  • Naira closes at N283 to dollar

    Naira closes at N283 to dollar

    The naira yesterday fell to N283 to dollar despite dollar injection worth $76.8 million into the market. The dollar supply was the fourth in row by the Central Bank of Nigeria (CBN) to boost forex liquidity

    The CBN is selling dollars on the interbank market for the fourth day to ease dollar shortages after it floated the currency, traders said.

    Nigeria ditched a peg on the naira to allow the currency trade freely on the interbank market, but traders said dollar liquidity was tight, leaving the CBN as the main supplier of hard currency.

  • Naira recovers as CBN injects dollar into market

    Naira recovers as CBN injects dollar into market

    Dollar injection by the Central Bank of Nigeria (CBN) yesterday lifted the naira to N282.5 against the dollar from N284 it closed on Tuesday. The naira rose 0.7 per cent to 282.5 per dollar, after earlier dropping as much as 0.5 per cent.

    The local currency made its first gain against the greenback since starting to trade without a peg, as the CBN sought to stabilize the market by selling dollars.

    The CBN sold dollars onto the interbank forex market for a third day to ease dollar shortages after it floated the currency. The regulator has intervened in the market by selling forex  since it ended the currency’s 16-month fix of 197 to 199 per dollar on Monday. It sold $4 billion in the spot and forwards markets that day to clear a backlog of demand for hard currency, and followed that with about $100 million of sales on the spot market on Tuesday.

    “The market expects the CBN to continue to intervene on a daily basis for now as it is easily the only source of dollar supplies,” Sewa Wusu, head of research at SCM Capital Ltd., told Bloomberg. “Foreign direct investment and portfolio flows are yet to start flowing in as investors wait on the sidelines to watch for liquidity, price discovery and stability.”

    Forward contracts dropped as traders reduced their bets on how much further the naira will weaken, although they still see it dropping 6.5 percent by late September. Three-month naira non-deliverable forward contracts fell 4.7 per cent, the most on a closing basis since May 17, to N302.25 per dollar.

    “The monetary authority will be a regular participant in the interbank market, at least in the short term, to ensure that sufficient liquidity is available to facilitate two-way trade,” analysts at Johannesburg-based Rand Merchant Bank, including Celeste Fauconnier and Nema Ramkhelawan-Bhana, said in a note to clients.

    The benchmark equity index rose for a second day, advancing by 2.4 per cent to 30,127.82, its highest close since October 21. It has soared 34 per cent since falling to a more than three-year low on January 19, as local investors buy stocks anticipating a return by foreigners, who fled when the CBN imposed capital controls to defend the naira’s peg.

  • CBN may peg exchange rate at N255/315 to dollar

    •Forex reserves down to $26.5b

    The Central Bank of Nigeria (CBN) is likely to peg the naira exchange rate against the dollar at N255/315 to dollar, Sub-Saharan Africa Economist at Renaissance Capital (RenCap), Yvonne Mhango has said.

    She explained that the N255/315 rate represents fair values for the local currency as suggested by two real effective exchange rate models.

    “At this new ‘price’ for the naira, demand and supply would be brought into equilibrium through a decrease in forex demand (rationing effect) and increase in forex supply (the incentive effect). This would imply short-term pain, not least because of the inflationary effect, and high interest rates. But we believe decent growth would return, particularly given the low base effect,” she said.

    In a report titled: ‘Nigeria: Winds of change- More flexible forex policy’, she  said the naira peg of N197 to N199 to a dollar would be sustained to support imports  for critical sectors, as deemed by the government, such as agribusiness, manufacturing, exporters, fuel refineries, and the power sector.

    “We expect all other forex transactions to be directed towards a new, flexible interbank forex market, which the Central Bank of Nigeria (CBN) will cease funding. This market would be funded by exporters, such as international oil companies, and autonomous sources, in our view. We expect that alongside the unveiling of a new forex policy framework, the authorities will specify the transactions that will take place at the fixed peg window,” she said.

    On whether the naira will be allowed to fully float on the interbank market, Mhango said such is unlikely to happen.

    Meanwhile, the forex reserves fell to $26.50 billion by May 23, down  by 2.8 per cent from a month ago, Reuters quoted the CBN data.

    Nigeria’s dollars reserves stood at $27.26 billion a month ago. They have dropped 10.9 per cent from last year when they were at $29.73 billion. A plunge in oil prices has eaten into Nigeria’s foreign reserves, forcing the CBN to introduce currency controls, which have frustrated businesses and caused the economy to contract.

  • Naira stabilises at N350 to Dollar

    Naira stabilises at N350 to Dollar

    The Naira on Friday remained stable at the parallel market, exchanging at N350 to the Dollar, the News Agency of Nigeria (NAN) reports.

    The Nigerian currency maintained same value since Wednesday.

    However, the Naira weakened further against the Pound Sterling as it traded at N500 to the Pound, from N390 since Wednesday, while the Euro remained stable at N385.

    Meanwhile, the Central Bank of Nigeria (CBN) was yet to come up with modalities for implementing its flexible exchange policy, as its official rate remained at N197 to a Dollar.

    Traders at the market said they were waiting for the new guidelines for the flexible exchange rate policy of the apex bank.

     

  • CBN may reopen banks’, IOCs’ dollar windows to BDCs

    CBN may reopen banks’, IOCs’ dollar windows to BDCs

    The Central Bank of Nigeria (CBN) is likely to reopen the dollar sales by banks and International Oil Companies (IOCs) to bureau de change (BDC) operators, The Nation learnt yesterday.

    The policy shift is part of the modalities to be unveiled by the apex bank on the newly introduced flexible exchange rate policy, President, Association of Bureau De Change Operators of Nigeria (ABCON), Alhaji Aminu said.

    He said with the liberalisation of the foreign exchange market, foreign investors are expected to pump in nearly $12 billion to the economy, and such funds should be accessed by the BDCs.

    “We’re waiting for CBN’s modalities on the new foreign exchange window. We would want to see a circular authorising banks and IOCs to sell dollar to BDCs. We would also want the CBN to set limit on how much dollar a BDC can access from the banks or IOCs,” he said.

    Gwadabe said the BDC operators are no longer interested in getting dollar from the official forex window, because of the challenges being faced by the country in terms of foreign exchange scarcity.

    The CBN had in February, stopped, with immediate effect, sale of dollars (forex) through the Retail Dutch Auction System (RDAS) and interbank to BDC operators.

    A circular to authorised dealers signed by CBN Director, Trade & Exchange, Olakanmi Gbadamosi, however said the weekly sales of forex to BDCs will be sustained by the CBN based on the liquidity needs of the market.

    He explained that the regulator took the decision based on ongoing review of developments in the foreign exchange market and the need to check speculative demand in the market.

    Both the interbank and RDAS funds, he said, should be used for strictly funding of Letters of Credits, Bills for Collection and other invisible transactions. However, this is subject to appropriate documentation as provided by extant regulations.

    The RDAS and interbank funds, he said, should no longer be sold to BDCs and other authorised dealers. “In continuation of the review of developments in the foreign exchange market and to curb speculative demand in the market, both the RDAS and interbank funds should henceforth be used, strictly for funding of Letters of Credits, Bills for Collection and other invisible transactions. It is also subject to appropriate documentation as provided by extant regulations,” Gbadamosi said.

  • Naira sells at N322 to dollar at parallel market

    The Naira on Monday, traded at N322 to a dollar at the parallel market in Lagos.

    The News Agency of Nigeria (NAN) reports that the currency was stable in the previous week, maintaining value of between N315 and N320 to a dollar.

    However, the naira traded at N450 and N360 for Pound Sterling and the Euro respectively, at the day’s transaction.
    The naira also maintained N197 at the official Central Bank of Nigeria (CBN) rate.

    Traders at the parallel market said that the proposed currency swap deal between Nigeria and China would shore up the value of the naira when implemented. (NAN)

  • Naira stable at N321 to Dollar at parallel market

     The Naira on Monday continued to exchange at N321 to the Dollar at the parallel market.

    The News Agency of Nigeria (NAN) reports that the nation’s currency has maintained this value since April 1.

    The Naira, however, slide against the Pound Sterling and Euro as it traded for N445 and 355 respectively, from N457 and N357 it traded last week.

    Meanwhile, the Naira also sold for N197 to the Dollar at the official inter-bank rate.

    Traders at the foreign exchange market said that activities at the market had yet to rebound after the weekend break.