The Nation Newspaper

Tag: Naira

  • Naira remains firm against the dollar, pound sterling

    Naira remains firm against the dollar, pound sterling

    The Nigerian currency, the naira, at the weekend, traded on a stable platform against two major international currencies, the dollar and the pound sterling, as transactions ended for the week.

    Investigation revealed that the dollar and the pound sterling were sold at N155.72 and N170, respectively, at the official and bureau de change since Jan. 6.

    At the black market, the naira was exchanged for the dollar at N170, while the pound sterling went for N270.

    A breakdown of weekend’s transactions showed that the naira appreciated marginally by 10k, against the pound, trading at N254.08 from N254.09 at the official market.

    The naira, however, remained firm against the pound sterling at both the Bureau de Change and the Black market, as it had sold at N270 since Jan. 6.

    At the official market, the Naira lost 28 kobo, trading at N210.48 to the Euro, compared with N210.20 on Jan. 6.

    Overall, the naira in the week under review, gained 50k against the Euro, to close at N230.50k, compared with the opening figure of N230 at the bureau de change market on Friday.

  • Naira remains firm against dollar at BDCs

    Naira remains firm against dollar at BDCs

    The Nigerian currency, the Naira traded firmly against the dollar at the official and parallel markets on Friday, the News Agency of Nigeria (NAN) reports.

    Naira traded at N170 to the dollar at the Bureau De Change (BDCs) and N155.7 at the official market.

    At the “black” market, the Naira traded also at N172 to the dollar since Dec. 23.

    It sold at N272 to the Pound, losing N4 from the N268 it was offered at the BDCs on Dec. 22.

    The Naira, however, appreciated against the Pound at the official market, selling at N253.98, as against N254.80 on Dec. 23.

    The Naira at the black market, depreciated against the Pound with N3, as it was sold at N275 from N272.

    The Naira against the Euro went for N212.29 at the official market and N220 at the BDCs.

    It depreciated against the Euro at the black market, as it sold for N325 from the N324.5 on Dec.18 at the black market.

    Source: NAN

     

  • Naira eases, oil firms’ dollar sales to support

    Naira eases, oil firms’ dollar sales to support

    The naira weakened marginally yesterday due to strong dollar demand, but the local currency was expected to be supported later in the week by energy firms selling forex, traders said.

    The naira closed at N158.75 to the dollar, slightly weaker than the N158.70 it closed on Friday.

    Traders said about $141 million sold by a unit of French oil firm Total on Friday helped to limit losses and more energy firms were expected to come to the market this week.

    Most energy companies operating in the country sell dollars to banks on a monthly cycle to get naira for their domestic obligations.

    The naira has been maintained in a N158-N159 band against the dollar since last month, mainly due to support provided by international oil companies selling forex and the Central Bank’s monetary tightening measures.

    Meanwhile, yields on Nigeria’s treasury bills fell marginally by around 0.15 percentage points across all tenors at a primary auction last week, where the apex bank sold N99.93 billion worth of the debt with 3-month to-one-year maturities.

    The CBN sold N20.64 billion in 91-day treasury bills at 10.7 per cent, 15 basis points lower than the 10.89 per cent it attracted at the previous auction on November 6.

    A total of N25 billion in the 182-day paper was sold at 11.45 per cent against 11.60 per cent previously, while N54.29 billion in the 364-day paper was sold at 11.64 percent compared with 11.8 percent previously.

    “My expectation is that the naira should strengthen in the week as more oil companies sell dollars,” one dealer said.

  • Dollar demand for Yuletide’s imports weakens naira

    Demand for dollar to match year-end imports by large corporations has put pressure on the naira. Analysts insist that the local currency may continue to face rising demand until importers conclude orders for the year, writes COLLINS NWEZE

     

    Naira depreciation continued last week due to increased dollar demand by corporate organisations to cover import bills and other foreign exchange obligations for the year-end.

    The naira declined by 1.2 per cent at the parallel market to trade at N167 per dollar as at the end of the week.

    This has brought the official cum parallel markets spread to N11.95, primarily due to increased demand from importers. On the Retail Dutch Auction System (RDAS) market, the Central Bank of Nigeria (CBN) sold $399.9 million and $399.6 million on Monday and Wednesday at a marginal bid of N156.1 and N155.8 per dollar respectively.

    Analysts at Afrinvest West Africa Plc said they expect further pressure on the naira as the Yuletide draws closer.

    Rates at the money market trended in opposite direction to the declining yields witnessed across various treasury instruments during the week. The Nigeria Interbank Offered Rate (NBOR) call rate was up by 39 basis points (bps) week-on-week, closing the week at 10.58 per cent while the three-months and 12-months NIBOR trended in like path with 168bps and 32bps increase in the same manner to 13.16 per cent and 12.58 per cent. “While we expect a marginal retraction this week, we expect a more stable money market rates for the rest on the year,” the analysts had said.

    The inter-bank rate was broadly steady on 29 October, reflecting improved market liquidity from treasury bills (TBs) and open market operation (OMO) repayment. The call/overnight and seven-day money market rates were: 10.5 per cent and 11 per cent respectively on 29 October.

    The three-month NIBOR was 12.4 per cent, though less activity is done on the tenor. The inter-bank secured lending (Open Buy Back) was also steady on 10.33 per cent for commercial banks and 10.5 per cent for discount houses on 29 October.

     

    Capital flight

     

     

    The CBN developed a macro-prudential framework to mitigate the risk of sudden capital flight in the economy, its deputy governor, Economic Policy, Dr. Sarah Alade said.

    Speaking during the International Monetary Fund (IMF) launch of Regional Economic Outlook for Sub-Saharan Africa in Lagos, she said most of the capital flows have been in portfolio investment which is more volatile and transient in nature.

    She said the CBN still insists that investors get Certificate of Capital Importation (CCI) from banks as a way of ensuring that capital flows do not easily exit the economy.

    CCI is aimed at providing customers with statutory evidence of capital inflow/investment into a Nigerian company. It legitimises and facilitates the repatriation of dividends and capital to the foreign investor.

    According to her, while this trend is a plus for the economies in sub Saharan Africa and have helped countries to meet some unmet financial obligation, it also can cause financial crisis if not properly monitored and managed.

    She stressed the need to keep proper records of inflows to better monitor and effectively manage such capital flows.

    According to her, enhanced macroeconomic and financial policies should be put in place, as inflows is more likely to be successful if supported by sound fiscal, monetary, international reserve buffers to sustain.

     

    Pension fund

     

     

    The Nigerian Stock Exchange (NSE) is seeking to have rules on pension-fund investing relaxed to attract funds and boost Africa’s third-best performing gauge this year, its Chief Executive Officer, Oscar Onyema said.

    Nigeria has more than N3.5 trillion in invested retirement savings, according to the National Pension Commission (Pencom). Investors should be able to put that money into companies with at least three years of financial statements, less than the five required now, he said in an interview with Bloomberg.

    “Most of Pencom’s regulations are designed to protect investors, but investors are becoming more sophisticated.

    “We are working very closely with them, the National Assembly, and other appropriate bodies to highlight areas where we believe there is a need for enhancement.”

    Agric loans

    The Central Bank of Nigeria (CBN) guaranteed a total of N840 million to 4,413 farmers under the Agricultural Credit Guarantee Scheme (ACGS) in August, a report released by the regulator showed.

    This amount, it said, represented a decrease of 6.9 and 77 per cent below the levels in the preceding month and the corresponding period of 2012, respectively.

    A sub-sectoral analysis showed that food crops obtained the largest share of N669.9 million guaranteed to 3,195 beneficiaries, livestock got N123.9 million (14.9 per cent) guaranteed to 1,016 beneficiaries, while fisheries had N27.6 million (3.4 per cent) guaranteed to 93 beneficiaries.

    Others received N6.2 million (0.7 per cent) guaranteed to 62 beneficiaries, mixed crops received N6.2million (0.7 per cent) guaranteed to 24 beneficiaries, while Cash crops received N6.1 million (0.7 per cent) guaranteed to 23 beneficiaries.

    Analysis by state showed that 28 states benefited from the scheme during the month with the highest and lowest sums of N121.3 million (19.9 per cent) and N22.7 million (0.1 per cent) guaranteed to Edo and Delta states, respectively.

     

    Money laundering

     

    INTER-Governmental Action Group against Money Laundering in West Africa (GIABA), has advised banks to report suspicious transactions perpetrated by their customers to Financial Intelligence Unit (FIU) as well as observe customer due diligence.

    These, the GIABA Information Officer, Timothy Melaye said would keep Nigeria out of the list of countries identified as jurisdictions with significant deficiencies in their Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) regimes.

    Melaye, told The Nation at the weekend banks should do more in ensuring that they understand their customers’ businesses better. He said Nigeria has taken the right steps including the establishment of legal and regulatory framework that will assist it meet its anti-money laundering initiatives, the Financial Action Task Force (FATF) and

    GIABA in a statement said: “The FATF welcomes Nigeria’s significant progress in improving its AML/CFT regime and notes that Nigeria has established the legal and regulatory framework to meet its commitments in its Action Plan regarding the strategic deficiencies that the FATF had identified in February 2010. Nigeria is therefore no longer subject to FATF’s monitoring process under its on-going global AML/CFT compliance process. “Nigeria will work with GIABA as it continues to address the full range of issues identified in its Mutual Evaluation Report.”

     

    Equity fund

     

    Private equity firms have invested nearly $12 billion in Nigeria, South Africa and other Africa countries. The firms have also raised almost $10 billion, according to a study released last week by Ernst & Young and the African Private Equity & Venture Capital Association (AVCA).

    Reuters in a report, said many private equity firms were adamant that Africa is the next hot spot for the industry as its burgeoning middle class continues to bloom, but the pension and endowment funds who invest in private equity funds are more cautious.

    According to the report, it is not hard to see what has attracted them to the continent, adding that over the last ten years, Africa’s economic output has increased threefold to $2 trillion and six African countries have been among the fastest-growing economies in the world.

     

    World Bank

     

    Nigeria’s short term macroeconomic outlook looks generally strong, with the likelihood of higher growth, lower inflation, and reserve accumulation, the World Bank said last week.

    In a statement, the global lender said the development will present the government with an opportunity to make progress in key reforms and public investments associated with the Transformation Agenda for job creation, diversification, and more effective governance.

    The Nigeria Economic Report (NER) launched by the World Bank earlier in the year sounded a cautionary note, indicating that the nation’s economic growth had not automatically translated into better economic and social welfare for Nigerians.

    “Poverty reduction and job creation have not kept pace with population growth, implying social distress for an increasing number of Nigerians,” the NER noted.

    As part of its forecast for the country, the NER also suggests that the country will need to build up its fiscal reserve to protect it from oil price volatility. It will also need to increase internally generated revenue to compensate for what will likely be declining oil revenues relative to the size of the economy.

    Given that Nigerian Gross Domestic Product (GDP) is growing much faster than oil output, and is experiencing significant inflation at a stable exchange rate, the size of Government oil revenues relative to GDP should decline even in the event that oil prices increase.

     

    Leasing

     

    Leasing could be a significant financing alternative for projects and businesses that would create wealth for the economy, a communique issued at the end of this year’s leasing conference held in Lagos, explained.

    The communique noted that globally, leasing has been used to facilitate the sale of vendors’ goods, enhance lessors’ profits and grant lessees the access to productive assets.

    The lessor, vendor and lessee need to collaborate for them to achieve set objectives.

    Noted the communique: “There exists a communication gap between the lessor and vendor which must be adequately bridged to produce a more robust leasing environment.

    “The potential of leasing is high considering the low lease penetration in Nigeria in comparison with other countries. There is need to regulate the activities of vendors in order to check the unscrupulous acts of some vendors which are detrimental to the growth of the leasing industry.”

    It added that professionals should facilitate accurate valuation of leased assets and create a strong secondary market for used assets, noting that improved synergy between lessors and vendors will create growth and employment for the economy.

    The communique disclosed that ELAN will liaise with vendors and other stakeholders to create an efficient leasing industry that will continue to build wealth for the economy, adding that the body will continue its proactive initiative by bringing to the membership fold reputable vendors and work towards setting standards for their dealings with lessors.

     

  • CBN defends naira with $4.6b in two months

    CBN defends naira with $4.6b in two months

    The Central Bank of Nigeria (CBN) defended the naira with $4.6 billion in two months, The Nation investigation has shown.

    The funds were offered and sold in 16 Wholesale Dutch Auctions (WDAS) in August ($2.4million) and September ($2.2million).

    Findings from the CBN website showed that the apex bank maintained steady supply of dollars to the WDAS market throughout the periods, with a maximum of $400 million, on September 25.

    Other dollar supplies were pegged at $300 million, including funding on September 2, 9, 11,16, 18, 23 and 30. Also, a uniform dollar sale of $300 million was achieved during the eight trading sessions in August.

    However, September transactions were not uniform, as $285 million was sold on September 5, $248 million on September 7 and $221 million September 2. The CBN also sold $300 million on September 14, $258 million on September 19 and $290 million on September 21. There were $300 million and $263 million sales on September 26 and 28.

    According to the CBN, naira exchange rate remained stable at the WDAS segment of the foreign exchange market during the period. The exchange rate at the WDAS during the review period opened and closed at N157.32 to a dollar, while the average rate during was N157.31 to a dollar.

    At the interbank segment, the naira exchange rate opened at N160.75 to a dollar and closed at N161.47 to a dollar, representing a depreciation of N0.72 to a dollar or 0.45 per cent.

    “The average interbank exchange rate during the period was N160.78 to a dollar. At the Bureau De Change (BDC) segment, the selling rate opened at N162.50 to a dollar and closed at N163 to a dollar, representing a depreciation of N0.50 to a dollar or 0.31 per cent.

    The average BDC exchange rate was N162.14/US$.

    According to the CBN, “The stability of the exchange rate reflected the commitment of the bank to supporting the naira at a time of massive depreciation in the currencies of emerging and frontier countries. This commitment was underscored by the policy of intervention to improve supply conditions, and the very tight monetary conditions maintained since the July 23 Monetary Policy Committee (MPC) meeting.”

    However, the CBN, on October 2, replaced WDAS with Retail Dutch Auction System (RDAS) because of the ineffectiveness of the former in addressing hitches in the foreign exchange market.

    Head, Global Research Africa, at Standard Chartered, Razia Khan, explained that the WDAS was abused because it allowed banks to collate bids for clients and make a single forex bid.

    However, under the RDAS, banks will place bids for clients who qualify to buy forex at the official auction.

    “This change will allow the authorities to monitor more accurately various sources of forex demand and any potential duplication of forex demand in the system. Banks will remain responsible for all documentation requirements,” she said.

     

     

     

     

     

     

     

     

     

  • Naira in free fall

    Naira in free fall

    Naira fell the most in more than about two years as the Central Bank of Nigeria (CBN) held its last currency auction before tightened controls of the sales are implemented, boosting demand for dollars.

    Bloomberg report said the naira retreated 1.1 per cent to N161.55 per dollar, its biggest drop since January 2012 on a closing basis. That brought its decline this month to 0.1 per cent and pared a quarterly gain of 0.6 per cent, the first advance in three.

    The CBN will replace its scheduled wholesale foreign-exchange sales with retail auctions from tomorrow to curb dollar demand, the apex bank said. The CBN offers foreign currency twice a week to keep the naira within a range of three percentage points above or below 155 per dollar. The regulator sold $300 million yesterday, compared with $300.2 million on September 25.

    Chief Executive Officer, Forward Marketing Bureau de Change Limited, Abubakar Mohammed, said: “Dollar demand was high yesterday at the interbank market and the CBN auction, being the last day for the wholesale. With retail auctions, banks will buy dollars on proof of request from customers, unlike in wholesale auctions when they could buy and resell.”

    The naira’s decline yesterday was the biggest among 24 African currencies monitored by Bloomberg. It rallied 0.8 per cent last week after CBN Governor Lamido Sanusi held the benchmark lending rate at a record high 12 per cent on September 24 and pledged to use the country’s foreign-exchange reserves to bolster the currency.

    While the naira depreciated yesterday, retail auctions will probably tighten dollar demand and help support the currency, which has weakened 3.3 per cent this year, Mohammed said.

  • Naira closes flat as banks short dollar

    Naira closes flat as banks short dollar

    Naira traded flat on the interbank market on yesterday as lenders exited the U.S. currency to cover their funding needs on the local currency amid tight naira liquidity.

    The Central Bank withdraw N242 billion from the banking system two weeks ago to enforce a new cash reserve requirement (CRR), aimed at tightening naira liquidity to support the currency.

    The regulator removed N1 trillion in August when it first announced a hike to CRR for banks to take on public sector funds to 50 percent from 12 per cent.

    The naira closed at N161.9 to the greenback, the same level it closed on Friday. A dealer told Reuters that a naira shortage on the market had caused banks to exit their dollar positions, to meet obligations in local currency.

    “We see slowing demand for the dollar this week which should help stabilise naira within the present range,” another dealer said.

    Tighter liquidity has also driven interbank lending rates higher. Last Friday, interbank rate climbed to an average of 26 per cent, on the apex bank\s policy moves compared with 18 per cent the previous week.

    At the official foreign exchange window, the Central Bank sold $300 million at N155.76 to the dollar, the same amount and rate it auctioned last Wednesday.

  • Naira strengthens after dollar auction

    Naira strengthens after dollar auction

    The naira strengthened the most this month, erasing earlier declines, after the Central Bank of Nigeria (CBN) sold the largest amount of dollars in two weeks at an auction.

    The naira appreciated by 0.5 per cent to N162.60 per dollar as of 4:43 p.m. in Lagos, posting its biggest gain since August 30, according to data compiled by Bloomberg.

    The apex bank sold $300 million at a foreign-exchange auction to lenders yesterday, it said in an e-mailed statement. That’s the most at a sale since August 26, according to data on its website. The regulator, which sells dollars at twice-weekly auctions to support the naira, is the country’s major supplier of foreign currency.

    “Increased dollar supply by the apex bank reduced pressure on the naira, prompting the local unit to strengthen,” Tunde Ladipo, the Chief Executive of Lagos-based Valuechain Investment Limited, said by phone.

    The yield on Nigeria’s Eurobonds due January 2021 slipped two basis points, or 0.02 percentage point, to 5.875 per cent.

    On the westcoast, Ghana’s cedi weakened 0.1 per cent to 2.1800 per dollar in the capital, Accra, its lowest level on record.

  • Naira flat as oil firms sell $107m

    Naira flat as oil firms sell $107m

    Naira yesterday, closed broadly flat against the dollar on the interbank market as two multinational oil firms sold about $107 million to some lenders.

    Bloomberg report said the unit ended flat at N161.48 to the greenback on the interbank, after weakening to 162 naira during intra-day trade. It closed at N161.45 on Friday.

    Traders said the local unit of Exxon Mobil sold $72.2 million, while Italian oil firm Eni’s Nigerian unit sold $35 million.

    Strong demand for the dollar has continued to mount pressure on the naira despite measures by the central bank to tighten liquidity in the banking system to curb speculation and prop up the local currency.

    At a forex auction held yesterday, the Central Bank of Nigeria (CBN) sold $300 million at N155.76 to the dollar compared with $290.5 million it sold the same rate at Wednesday’s auction. Dealers say the naira may ease to the N162 mark against the greenback this week unless more oil firms sell the hard currency as part of their month-end dollar sale.

  • The 1 trillion Naira shopping list

    One trillion naira is a lot of money in any currency in the world. Except perhaps in Zimbabwe where it’s said, you will need a trailer load of banknotes to buy a loaf of bread. That must be one very expensive loaf indeed.

    Anyway, for a developing country like Nigeria facing serious challenges and is crying out for development, that kind of money would have come in really useful. Just imagine for a moment what the country could do with 1 trillion naira. Let’s pick just three areas of the economy. It could fix some of our very bad roads, we could invest some of it in education so our students don’t spend more time outside the lecture halls than inside due to incessant strikes by their disgruntled teachers and buy some much needed equipment and life-saving drugs for our hospitals so our people no longer die from treatable ailments. There could even be some ‘change’ left after all that expenditure for some boost to the power sector so our towns and cities can be lit up at night instead of the dense jungle-like darkness all around us daily.

    But like a fool and his money, what does our country do with that mouth-watering sum? We spend it on just a very select and exclusive set of citizens, our lawmakers who must be the most pampered in the world. Indeed, if a former Minister of Education and ex-World Bank Vice-President, (Africa Region), Mrs. Obiageli Ezekwesili, is to be believed, our House of Representative members (360) and Senators (109), are the highest paid in the world. According to her, that huge amount of over 1 trillion was spent on salaries and allowances of these legislators between 2005 and 2012 alone.

    Now I’m not an economist and I was not very good in Maths back in my school days. But even with my limited calculation abilities, I can tell that there’s something seriously wrong in this sort of situation. How can a developing country struggling with serious socio-political and economic problems with one of the lowest per capital income in the world ($1,500), with a poverty index of 112 million people (out of a population of about 170 million) spend so much money on just 469 people? What special work are they doing that we should spend so much of our hard-earned resources on them to the detriment of the remaining millions of others.

    I know a lot of things don’t just make sense in this country but this is one of those senseless things we are doing in this country that is seriously holding us back as a people. As Ezekwesili noted, most of the nation’s income from oil, taxes and other sources are spent on recurrent expenditure- a whopping 82 per cent of its budgetary appropriations- leaving a mere 18 per cent for capital projects. Now, you see why nothing works in this country and like an intoxicated masquerade, the nation keeps moving round in circles with occasional steps backwards for variety’s sake. In sane countries, capital projects take the lion share of budgetary allocations as such money is sorely needed for infrastructural development and to service other areas of the economy. But here, we spend most of our money on the over pampered lot at the National Assembly whom many Nigerians don’t even understand what they do in the first place.

    We don’t even get value for money for all the investments in them. How many laws for instance have been passed in the past five years that have impacted positively on the lot of the long suffering masses of this country? If they are not debating on how they can increase their already bloated allowances and salaries, they focus on such depressing issues as child marriages.

    Obviously, we are all hungry for change in our country and a better deal for our people who have suffered so much at the hands of those at the helm of affairs. But all that desire for change will be meaningless if areas that drain our resources are not plugged. So, something needs to be done about these lawmakers and their pay.

    The military in 1999 bequeathed to the nation a very costly presidential system that is draining the nation of already scarce resources. We simply cannot afford to continue running such an expensive system. Perhaps, the time has come for the country to adopt a more cost efficient system of lawmaking that will not milk the country dry.

    Ezekwesili advocated this much when she advised that the job of local, state and National Assembly members should be a part-time activity rather than a full time job.

    Maybe this will arrest the abnormal situation whereby the more money the nation earns, the poorer the people become with the poverty index rising in geometric proportions from 17.1 million Nigerians living below poverty level in 1980 to a frightening 112.47 million people today.