The Nation Newspaper

Tag: Naira

  • CBN’s plan to liberalise naira excites investors

    CBN’s plan to liberalise naira excites investors

    Ongoing plans by the Central Bank of Nigeria’s (CBN’s) to free up the naira, particularly via a new trading window, have gone down well with some adventurous stock and bond investors who are cautiously returning to the markets they fled two years ago.

    Once considered one of the most promising emerging markets, Nigeria was affected when it introduced some foreign exchange restrictions to counter the effects of the 2014 oil price crash.

    These will take years to unwind, some analysts fear, while others are concerned the new trading facility could come under pressure if oil prices were to take another tumble, or trade through it could slow if Nigeria’s currency reserves run low.

    The much-criticised move starved the economy of dollars, throttled foreign investment and plunged Africa’s largest economy into recession for the first time in more than 25 years.

    But authorities told Bloomberg that since tried to normalise the currency market and alleviate dollar shortages, most recently via the “Investors & Exporters FX Window”, which allows investors and traders to swap nairas for dollars at market-determined rates.

    The new window adds to a confusing array of exchange rates. But it does seem to be succeeding in luring back some foreign funds, especially as the economy should return to growth soon and inflation is finally slowing. “It is a very good thing. Obviously having multiple exchange rates is not an optimum situation yet, but it is moving towards a more realistic exchange rate,” said Oliver Weeks, economist at hedge fund Emso Asset Management. “This certainly makes the country more interesting.”

    Under the new system, in place since April, the opening and closing naira/dollar rates are determined by a poll of authorised bank dealers. The NAFEX or Nigerian Autonomous Foreign Exchange Rate Fixing is set around noon and serves as a benchmark for derivatives such as forwards and futures. Weeks said Emso has used the new mechanism successfully several times in the past six weeks.

  • BDC operators advise CBN on naira

    BDC operators advise CBN on naira

    The Association of Bureaux De Change Operators of Nigeria (ABCON) has advised the Central Bank of Nigeria (CBN) on steps to sustain the naira’s  recovery against dollar. The naira has remained at N362/$1 at the parallel market in the last one week, a major improvement from N520/$1 in February.

    In a statement released yesterday, ABCON President Aminu Gwadade said the CBN should review BDCs dollar buying rate downwards from N360 to N350/$1 and enhance security surveillance at the borders to checkmate illegal cash movement that has dire consequences on naira’s stability.

    Gwadabe said the standard/average trade margin for BDCs across the world is 12 per cent and reviewing the rate to N350/$1 is less than three per cent for Nigerian operators.

    ”The CBN should be proactive enough to quickly review the BDC buying rate so as to bring the foreign exchange transfer rate down and boost market stability. The BDC rate should be brought down to N350/$1 for now and see the positive impact on the local currency,” he said.

    Gwadabe said the rate challenges faced by BDCs, if not checked, would trigger a liquidity crisis that may derail the ongoing recovery of the naira against the dollar. He said the BDCs will continue to support CBN’s determination to achieve exchange rate stability, and strengthen the value of the local currency.

    He said downward review of the BDCs rate is critical at present, as it will keep BDCs afloat to meet increasing forex demand at the retail end of the market. “For now, the parallel market operators are taking over our business because BDCs rates and their selling rates are the same and this has to change,” he said.

    He also called on the CBN to increase the volume of Personal Travel Allowances (PTAs) from $4,000 to $8,000; Business Travel Allowances (BTAs) from $5,000 to $10,000; school fees from $5,000 to $20,000 and medicals from $5,000 to $15,000 quarterly to deepen liquidity in the market.

    Gwadade, said implementing these recommendations will help to stop a new wave of volatility building up in the forex market over parallel market/BDCs rate convergence. Both the parallel market and BDCs rate are trading around N360/$1, and the BDCs buy the International Money Transfer Operators (IMTOs) proceeds from the CBN at N360/$1.

    He disclosed that with forex transfer rate at N375/$1, which is N15 higher than N360/$1 cash rate, rent seekers are mopping up dollars and moving them to Dubai, China and Lebanon from where they transfer them back to the country and make huge margins.

    Gwadabe praised the CBN for liberalizing the forex market and making more dollars available, but regretted that such funds are not really accessible in right volumes to the critical stakeholders like BDCs adding that increasing the volume of PTAs, BTAs, school fess and medicals will help to make more funds available to end users.

    “We are happy that the CBN is liberalising the foreign exchange market to ensure that its objective of deepening the market is achieved. We applaud its decision of allowing authorized dealers in interbank trading to release excess foreign exchange trading positions to other authorised dealers without seeking prior approval from the CBN,” he said.

    Gwadabe also said the coming of Investors and Exporters (I&E) Forex Window, was also part of CBN’s efforts to further develop the Nigerian forex market and improve market structure.

    Part of the liberalization policy, he added, is the directive that all interbank trades, spot, forwards, futures, options and swaps that impact on authorized dealers limit comply with rate reasonability standards. Besides, the CBN reserves the right to intervene as a buyer or seller as it deems fit on the interbank market.

    He reiterated that the forex liberalization policy has created more liquidity in the market, except that such funds are not accessible in the right proportions to key stakeholders.

    “What stops the CBN from raising the PTA and BTA to $8,000 and $10,000 per quarter? The school fees and medicals should also be increased to $20,000 and $15,000 respectively to put more dollars in the hands of end-users. That way, the liquidity that is coming from liberalization of the forex market will be absorbed,” he said.

    The ABCON boss believes that despite the challenges facing the economy, the CBN and BDCs should continue to brainstorm and find sustainable solutions that can help the country wriggle out of the ongoing forex crisis and achieve full economic recovery.

    He also pledged to ensure that purchased funds by its members are disbursed to end users and for eligible transactions only; operators will continue to render weekly returns on dollar purchases to the CBN while those that breach regulatory guidelines are sanctioned.

  • Naira strengthens against dollar

    Naira strengthens against dollar

    The naira on Thursday gained N2 against the dollar at the parallel market as it was traded at N386 to the dollar, stronger than the N388 it closed on Wednesday.

    At the same segment, the pound sterling and the Euro closed at N495 and N425, respectively.

    At the Bureau De Change (BDC), the naira was N362 to the dollar, while the pound sterling and the Euro exchanged for N492 and N423, respectively.

    The naira was exchanged at N305.6 to the dollar at the interbank.

    Currency traders said that the weekly offering of foreign exchange to BDCs by the CBN was paying off and restoring stability to the exchange rate.

    Alhaji Aminu Gwadabe, the President of Association of Bureau de Change Operators of Nigeria (ABCON), said that he expected the naira to continue to appreciate in the coming weeks.

    Gwadabe said that BDCs had taken measures to ensure that they would not run foul of the law in the foreign exchange market. (NAN)

  • Naira appreciates against dollar at parallel market

    Naira appreciates against dollar at parallel market

    The Naira on Monday appreciated against the dollar at the parallel market, the News Agency of Nigeria (NAN) reports.

    The Nigerian currency gained three points to exchange at N388 to the dollar, stronger than N391 it traded on Friday, while the pound sterling and the Euro closed at N495 and N425.

    At the Bureau De Change (BDC) window, the Naira was sold at N362 to the dollar, while the pound sterling and the Euro closed at N495 and N423.

    Trading at the interbank market showed that the Naira closed at N305.7, while the pound sterling and the Euro closed at N453.18 and N386.28.

    Currency traders said the liquidity boost at the FOREX market had forced the naira to appreciate.

     

  • CBN injects dollars to boost

    CBN injects dollars to boost

    A plan by the Central Bank of Nigeria (CBN) to pump more dollars into the interbank foreign exchange (forex) market may shore up the value of the Naira against the dollar.

    The Naira appreciated marginally on all trading sessions at the interbank market, opening last week at N305.80/$1 and settling at N305.70/$1 at the end of the week.

    But the Nigerian Autonomous Foreign Exchange Rate Fixing rate published on the FMDQ website depreciated marginally last week, opening at N376.54/$1 on Tuesday and closing at N377.95/$1 on Friday.

    At the parallel market, the Naira/dollar exchange rate remained at N391/$1 on all trading sessions.

    The CBN has been injecting dollars into the market to stabilise the local currency against the greenback. The apex bank supplied total of $1.2 billion in April into the interbank market, with the intervention frequency of two to three times per week.

    Also, the cumulative forex supply since February 20 remained at $3.61 billion, compared to $5.83 billion sold in January to April 2016.

    There were strong indications at the weekend that the CBN plans to inject more forex through intervention segments of the market thereby heightening expectations that the naira will appreciate significantly during the week.

    The expectations became rife following the inability of the authorised dealers to fully subscribe to various amounts offered by the apex bank on two consecutive times last week. Both events sent jitters to currency speculators perceiving dollar glut as imminent in the market.

    Laying credence to this development, CBN’s spokesman, Isaac Okorafor, confirmed the anticipated interventions in most segments of the market during the week, with effect from today.

    According to him, the Bureaux De Change (BDC) and the Small and Medium Scale Enterprises (SMEs) along with other major segments will also receive adequate intervention with a view to providing liquidity in the entire forex market.

    Also at the weekend, manufacturers praised the CBN over the forex management strategy adopted recently.

    The Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadiri, was quoted as saying that “the recent pronouncement of the CBN comes as a relief. If the intervention is sustained, there’s no doubt that we will have continued improvement in sourcing raw materials.”

    Also speaking, the Chairman of the United Bank for Africa (UBA) Tony Elumelu, also lauded the forex regime, noting that “the recent CNB policy initiatives, under the watch of Godwin Emefiele, has restored predictability, improved market confidence and significantly added a boost to the value of the national currency, fueling optimism that the economy would soon rebound from recession.”

    Analysts put Nigeria’s oil revenue estimate at a monthly value of $2.5 billion. Yet, the market forex demand hovers around $4.8 billion monthly.

  • Naira loses marginally against dollar

    Naira loses marginally against dollar

    The Naira on Tuesday depreciated marginally against the dollar at the parallel market, the News Agency of Nigeria (NAN) reports.

    The Nigerian currency on Tuesday afternoon lost one point to exchange at N391 to the dollar, weaker than N390 posted on Friday, while the Pound Sterling and the Euro closed at N498 N420 respectively.

    At the Bureau de Change (BDC) window, the Naira was sold at N362 to the dollar, while the pound sterling and the Euro exchanged at N490 and N417respectively.

    However, the Naira appreciated at the Nigeria investors and exporters window, closing at N379.68 to the dollar, stronger than N380.31, its opening rate.

    Trading at the Nigeria interbank market saw the Naira closed at N305.80 to the dollar.

    Currency traders said that in spite of the marginal loss of the Naira, the nations’ currency had remained stable.

    They called for patriotism on the part of Nigerians to save the Naira from the jaws of speculators and currency hoarders.

  • Naira may appreciate as CBN plans fresh interventions

    Naira may appreciate as CBN plans fresh interventions

    The naira is likely to appreciate against the dollar this week as the inter-bank forex market resumes today, after Workers’ Day holiday, analysts have predicted.

    The forecast on naira recovery becomes immenient as the Central Bank of Nigeria (CBN) commences another round of forex injections into the invisibles segment of the market.

    The naira was at the weekend, trading at N390 to dollar in the parallel market, and N306 to dollar in the official market.

    Industry experts are of the view that the rate of forex liquidity being pumped into the system by the CBN will lead to a depreciation of the dollar against the naira.

    The CBN Acting Director of Corporate Communications, Isaac Okorafor, in a chat with business correspondents at the weekend confirmed moves by the apex bank to inject more foreign exchange into the inter-bank segment of the market, saying it was in line with the commitment of the Governor, Godwin Emefiele, to ensure that those who had legitimate need for foreign exchange were guaranteed access to it.

    While stressing that the actions of the bank were in sync with its mandate of safeguarding the value of the local tender, Okorafor said the CBN remained determined to achieve a convergence of the rates in the interbank and Bureau de Change segments.

    With the latest policies of the CBN, which cater specifically for SMEs, exporters and importers, market analysts are of the strong view that the Naira will firm up against other major currencies when trading commences this week.

    Speaking at the weekend, frontline entrepreneur, Tony Elumelu also disclosed that global investors were excited about the forex policies of the CBN, which he stressed had brought predictability to the forex market.

    It will be recalled that the CBN recently issued a forex policy statement establishing special windows for Small and Medium Enterprises (SMEs) to enable SMEs import eligible finished and semi-finished items not exceeding $20,000 for an enterprise per quarter. The Bank also established an “Investors’ & Exporters’ FX Window” aimed at encouraging foreign investors in the country’s forex market.

    Okorafor again urged all stakeholders to play their respective roles in ensuring a smooth running of the foreign exchange market for the benefit of the Nigerian economy.

  • Naira dips slightly against dollar

    The Naira on Thursday depreciated slightly against the dollar at the parallel market, the News Agency of Nigeria (NAN) reports.

    The Nigerian currency lost two points to close at N390 to the dollar, while the Pound Sterling and the Euro traded at N495 and N415, respectively.

    At the Bureau De Change (BDC) window, the naira was sold at N362, while the Pound Sterling and the Euro closed at N490 and N420, respectively.

    Trading at the interbank window saw the naira close at N305.85 to the dollar.

    The naira, however, appreciated marginally at the investment and export window, as it closed at N379.04, from the N379.89 it opened earlier today.

    Traders at the market were hopeful that the naira would bounce back as the CBN sustained liquidity boost at the BDC subsector.

  • Naira stabilises at parallel market

    Naira stabilises at parallel market

    The naira on Monday stabilised against the dollar at the parallel market, the News Agency of Nigeria (NAN) reports.

    The Nigerian currency traded between N380 (buying rate) to N385 (selling rate) on Monday afternoon, maintaining the same rate as at Friday.

    The naira closed at N495 to pound sterling and N415 to Euro at the same segment.

    At the Bureau De Change (BDC) window, the naira was sold at N362 to the dollar, while the pound sterling and the Euro closed at N490 and N420, respectively.

    Trading at the interbank window saw the naira closed at N305.95 to the dollar.

    Traders commended the CBN for sustaining liquidity at the foreign exchange market
    as market volatility was not in the interest of the economy.

    NAN reports that the CBN had remained resolute in boosting liquidity in all the segments of the foreign exchange market.

    The apex bank, had on Friday, created a special window for investors and exporters to have uninterrupted access to foreign exchange, a move stakeholders described as the right direction.

     

  • Islamic organization distributes relief materials to Borno IDPs

    The International Islamic Relief Organization (IIRO) on Sunday distributed relief materials worth millions Naira to Internally Displaced Persons (IDPs) in Borno, as part of its global support to people in need.

    IIRO Country Representative, Sheikh Adil Hussain, flagged off the distribution of the materials at the NYSC Orientation Camp IDP settlement.

    Hussain explained that the objective of the donation was to provide succor to the IDPs who had lost almost everything to conflicts in the zone.

    “We are here to flag off the distribution of these relief items to the Borno IDPs as part of our humanitarian service all over the world.

    “Our organization has been in the vanguard to provide care for the less privilege members of the society especially women, orphans and the vulnerable,” he said.

    Hussain said that the items were purchased from donations sent from the headquarters of the organization in Saudi Arabia.

    “I wish to convey the greetings of Ustaz Ali Hussain, the secretary of the IIRO from the Kingdom of Saudi Arabia.

    “The money for the purchase of the relief items came through him.

    “We pray to Allah for a lasting peace in the North East so that the IDPs can go back home,” he said.

    Hussain said that the distribution of the items would be done in four IDP camps in Maiduguri targeting about 1,500 beneficiaries.

    He said that the distribution would also be done for IDPs in Yobe and Adamawa States.

    He said that aside from the donations, the organization was also sponsoring the education of 600 orphans in Borno to safeguard their future.

    Items donated included bags of rice, spaghetti, cooking oil and blankets among others.