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Tag: Naira

  • Naira eases on strong dollar demand

    The naira eased slightly yesterday on dollar demand from fuel importers and foreign investors repatriating dividends, despite oil firms selling the U.S. currency.

    Demand for the U.S. dollar has surged in the last three weeks, exerting pressure on the naira, as fuel importers and investors repatriating their dividends snap up any available hard currency.

    The unit closed at N158.28 to the dollar at the interbank, compared with Friday’s close of N158.20.

    This was despite the Nigerian units of Chevron selling $28.8 million, Italian oil firm Eni selling $23 million and Chinese-owned Addax selling $13 million to some lenders, dealers told Reuters.

    The Central Bank of Nigeria (CBN) auctioned $350 million at N155.74 to the dollar on its foreign currency auction yesterday, as against $371.7 million it sold at the same rate at last Wednesday’s auction.

    The apex Bank doesn’t provide data on dollar demand at its auctions.

    Dealers expect the naira to trade at the N158 level this week as more oil firms sell their dollars to the banks in order to fund their domestic obligation in local currency.

  • Naira weakens at interbank

    Naira weakens at interbank

    The naira eased against the greenback on the interbank market yesterday as expected dollar sales by some foreign oil companies failed to materialise, exerting pressure on the local currency, traders said.

    The naira closed at N158.30 to the dollar at the interbank, weaker than Friday’s close of N158.10 naira.

    Foreign oil companies operating in Nigeria normally sell hard currencies to local lenders to buy naira to meet their month-end obligations. Traders had expected the month-end cycle to begin, but said none of the oil firms sold dollars yesterday.

    At a foreign exchange auction, the Central Bank of Nigeria sold $371.7 million at N155.74 to the dollar, after offering $400 million, compared with $300 million it auctioned at the same rate at last Wednesday’s auction.

    “The market was a bit quiet today (yesterday) until there was a bit of dollar buying by some banks covering client positions,” another dealer said.

    Traders expect month-end dollar sales from oil companies to start trickling in this week, which should keep the local currency within the range of N158-N158.50 to the dollar.

  • Naira remains firm against dollar

    Naira remains firm against dollar

    The Naira on Wednesday remained firm against the dollar at the Central Bank of Nigeria (CBN’s) biweekly Wholesale Dutch Auction System (WDAS).

    The apex bank disclosed this on its Website after the conclusion of the auction.

    It sold 272.52 million dollars worth of foreign exchange to banks at the rate of N155.75 to the dollar at the auction.

    The CBN had sold Naira to a dollar at the rate of N155.75 at the previous auction on Monday.

    Nineteen banks participated at the auction, as against the seven that took part in the bidding at Monday’s auction.

  • Naira falls on oil-imports demand

    Naira falls on oil-imports demand

    The naira declined for a fifth day, reaching its lowest in more than five weeks on increased demand for dollars by oil importers and as the Central Bank of Nigeria (CBN) cut the amount of U.S. dollars sold at yesterday’s auction.

    The naira weakened by 0.1 per cent to N158.83 per dollar, the lowest on a closing basis since March 14, according to data compiled by Bloomberg.

    Nigeria relies on imports to cover 70 per cent of the fuel needs because of inadequate refining capacity. Those shipments into the country are a source of pressure on the naira, according to the CBN. The apex bank sold $246.5 million at an auction yesterday, compared with $266.2 million at the previous sale on April 17, it said in an e-mailed statement.

    The naira weakened “on huge dollar demand by oil importers,” Access Bank analysts led by Tony Monye and Michael Ndiomu, wrote in a note. The drop in the CBN’s supply also added pressure on the naira, Tunde Ladipo, Chief Executive Officer of Lagos-based Valuechain Investment Limited, said by phone.

    Borrowing costs on the nation’s local-currency debt due January, 2022, fell four basis points, or 0.4 per- centage point, to 11.44 percent, according to April 19 prices on the Lagos-based Financial Markets Dealers Association website.

    Yields on Nigeria’s $500 million of Eurobonds due January 2021 fell three basis points to 4.04 per cent yesterday.

    Ghana’s cedi retreated 0.3 percent to 1.9675 per dollar in Accra, the capital, the lowest on record.

  • CBN to maintain value of Naira

    CBN to maintain value of Naira

    The Central Bank of Nigeria  (CBN) continues to intervene in the currency markets to bolster the Naira, after its recent weakening to a seven-month low of 159.10 to the Dollar.

    Although Nigeria is the largest oil-producing nation in Africa, inflation and the need for imports have weakened the currency of late. This fall in value has prompted investors in Nigerian bonds to sell their positions, thereby putting more pressure on the Naira. The CBN’s stated objective, however, is to maintain the value of the nation’s currency within a tight bank of three percent, either side of 155.00. The Naira had strengthened to this plateau over the past year, maintained it for months, but then gradually began to depreciate over the last three months.

    Inflation was the primary concern in 2012. The central bank on six consecutive occasions raised interest rates to address rising prices. Rate changes stopped in November, resting at a 12 percent level. The NCB has passed on any rate adjustments since that time. Lamido Sanusi, Governor of the Nigeria Central Bank, stated this week that he expects the bank to leave interest rates unchanged at 12 percent over the coming months so as not to jeopardize the bank’s efforts to bring inflation back down to single digits, a program designed to stabilize the Naira’s exchange rate.

    Concurrent with this maintaining a constant interest rate posture, the CBN, however, has intervened in the currency markets by holding two U.S. Dollar auctions of $300 million and $276 million over the past week to cover various import needs of the country. When coupled with anticipated month-end sales by local oil producers, the combined effect is to provide stability for the Naira and keep it below the 159.75 threshold. The Naira today is holding steady at 158.55.

    Sewa Wusu, an analyst at Lagos-based Sterling Capital Ltd., has stated in a phone interview with Bloomberg that the “CBN’s increased intervention through the auction has ensured Naira stays within the targeted band amid increased dollar demand.”

    As for near-term prospects, most currency experts are forecasting a stronger Naira, based on the previous open-market actions and expectations of local oil companies. Investors also seem confident that the central bank will continue to support the Naira, as well. One dealer noted that, “We see the Naira trading around the 158 Naira to the Dollar level this week and early next week with more oil companies selling dollars as part of their month-end sales.”

    In a recent Reuters’ survey, 8 of 9 economists predicted that the CBN would not budge from their 12 percent interest rate benchmark. “The main focus of the debate … will be the inflation outlook … and the recent weakness in the currency,” said Andrea Masia, a Morgan Stanley analyst. He was also quick to add that the 2013 budget will have monetary implications that could impact inflation, as well. Inflation currently sits at 9 percent, but Governor Lamido Sanusi has publicly expressed concerns regarding the pressure posed on prices arising from outside of the country.

    Nigerian President Goodluck Jonathan recently approved a 4.99 trillion Naira budget that had received Parliamentary approval in February. The new budget represents a slight rise in government spending of 1.4 percent, a tentative compromise reached after several months of serious debate over future spending plans.

    The stage is now set for further minimal gains over the following week. Kunle Ezun and Kenneth Asenime, local analysts at Ecobank Transnational Inc. in Lagos, suggested a 158.10 figure in a newsletter to their clients, “with bias for moderate appreciation due to monetary policy support.”

    Bio:

    Article by Tom Cleveland of forextraders.com. Mr. Cleveland has been writing about economics and investments since 1980. Since 2010, Mr. Cleveland has been specifically researching currency fluctuations and many aspects of forex news. To read more on his work, view the news section on Forex Traders.

     

     

  • CBN intervention strengthens naira

    Intervention of the Central Bank of Nigeria (CBN) and foreign exchange upswing in the last one week forced the naira to halt a five-day decline. The local currency rose 0.9 per cent and traded 0.6 per cent stronger at N158.65 per dollar last Friday after the banking watchdog intervened with about $50 million dollars.

    Also, the reserve, which rose to $48.2 billion on March 14, strengthened the naira, which has dropped to 1.5 per cent this year, according to data obtained from the CBN website.

    “There was intervention from the central bank. There was a lot of corporate demand” and the regulator is trying to stabilise the market, he said,” Tega Adeda, a foreign exchange trader at Stanbic IBTC Holding Co, told Bloomberg.

    The bank reduced dollar sales to lenders by six per cent last week to $360 million. The regulator uses the twice-a-week auctions to stabilise the naira as costs of importing refined fuel, which accounts for 70 per cent of the local gasoline market, boosts dollar demand and puts pressure on the currency, according to the central bank.

    The CBN held the rate at the record level on January 21 to control consumer prices and maintain the naira’s level. Inflation eased to nine per cent in January from 12 per cent in December, the statistics bureau said last month.

    Borrowing costs on the country’s 16.39 per cent domestic bonds due January 2022 rose nine basis points to 11.27 per cent, according to Thursday’s data compiled on the Financial Markets Dealers Association website. Yields on the nation’s $500 million of Eurobonds due January 2021 fell two basis points to 4.204 per cent.

     

    Cashless

     

    The Central Bank of Nigeria (CBN) will from June 1, 2013 implement a policy that places N150,000 limit on all over the counter cheque withdrawals in commercial banks, microfinance banks and primary mortgage institutions (PMIs) nationwide.

    In a circular to all stakeholders, CBN Director, Banking and Payment System, Dipo Fatokun said the policy is in recognition of the success recorded in Lagos and the need to extend such success to other states within the federation. He said the Lagos success story has also contributed to the reduction of fraud on cheques and aided the National Financial Inclusion (NFI) Strategy.

    “All banks are therefore directed to ensure that implementation of N150,000 limit on third party cheques that could be cashed over the counter nationwide, with effect from June 1, 2013,” he said.

    Also, the CBN chief stopped banks from charging their customers payments for third party cheques below N150,000 cashed over the counter. “All banks are hereby directed to stop charging their customers for third party cheques of up to N150,000 cashed over the counter,” he said. He explained that the policy is in recognition of the CBN’s role in the development of an efficient payment and settlement system that is well modernised.

     

    GDR

     

    The admission of Zenith Bank’s Global Depositary Receipts (GDR) to the official list of the London Stock Exchange (LSE) and trading same on the LSE is expected to take place within the month, Renaissance Capital (RenCap), an investment and research firm had said.

    “Our understanding from management is that the listing of the instruments should happen in March 2013,” it said in an emailed report obtained by The Nation.

    It said the objectives of the GDR issuance are to increase the bank’s visibility and trading in its securities, as well as to expand and diversify its investor base. “Given that Zenith Bank is the most highly capitalised Nigerian bank with a capital-adequacy ratio of 29 per cent as at last September, and does not require any capital injection, it makes sense to us that the GDRs are non-capital-raising,” RenCap said.

    The GDR issuance, it added, simply gives existing shareholders the option to convert to an LSE-traded instrument. The conversion ratio is 50 common shares to one GDR.

     

    MfBs

     

    The National Microfinance Development Strategy will soon be released by the CBN. The document is expected to outline modalities for developing the subsector and rules that operators will follow to achieve improved performance s well s sector’s stability.

    The CBN is also working on consolidating on the achievements recorded so far by the country in the development of MfBs by strengthening the regulatory frameworks and other guidelines. This also includes formation of National Microfinance development Strategy with the United Nations Development Programme (UNDP) and the recent signing of a major agreement with the Alliance for a Green Revolution in Africa (AGRA).

    Besides, the CBN is considering the establishment of a Microfinance Development Fund (MDF) as a further step to deepen the financial market. The MDF when established, would assist in addressing teething challenges of underfunding for microfinance institutions in the country.

     

    Mortgage banking

     

    The CBN also last week approved the Regulatory and Supervisory Framework for the Operations of a Mortgage Re-finance Company (MRC) as an exposure draft. Its Director, Other Financial Institutions Supervision Department, Olufemi Fabamwo, said the framework is drawn based on provisions of the CBN Act 2007, Banks and Other Financial Institutions Act (BOFIA) CAP B3, Laws of the Federation of Nigeria (LFN) 2004, other relevant Laws.

    The CBN also set a minimum capital base for the subsector at N5 billion, but intending operators will have to pay non-refundable application fee of N100,000 and non-refundable licencing fee of N200,000.

    He said the framework provides for the licensing and establishment of a MRCs as specialised second-tier institution which would provide short-term liquidity, long-term funding and/or guarantees to mortgage originators and housing finance lenders.

    He said the establishment of MRC is primarily aimed at increasing the liquidity within the mortgage sub-sector and availability of mortgage credit in the country. It will also reduce mortgage and related costs, and make residential housing more affordable. It specified the standards and criteria for, and timing of, periodic assessments of the creditworthiness of borrowers, obligors, or other counterparties, and for the establishment of credit limits.

     

    IFRS

    The CBN has set up a roadmap on International Financial Reporting Standard (IFRS) stipulating compliance by all Small and Medium Scale Enterprises (SMEs) by January 31, 2014.

    The roadmap requires that the business community in the country would implement and converge in phases while the phases are submerged within a general implementation framework. The general plan would therefore ensure that appropriate changes and restructuring are made to processes, systems and the personel in terms of training and capacity building.

    The IFRS is a globally-accepted set of accounting standards, framework and interpretations, adopted by the International Accounting Standard Board (IASB and its interpretative body, the International Financial Reporting Interpretations Committee (IFRIC).

    The IFRS was issued by the IASB. It was issued to serve as the global accounting language for the purpose of meeting the information needs of global business investors, shareholders and financial services providers.

    The Financial Reporting Council (FRC) had earlier announced its decision to converge to IFRS in the last quarter of 2010, but the commencement date was later shifted to January 1, last year to ensure legal and capacity building in the project.

     

    Economy

     

    There is need to carry out radical reforms in the financial system of the country to achieve stability in the economy, CBN’s Deputy Governor, Corporate Services, Suleiman Barau, has said.

    Speaking at this year’s EuroFinance Conference in Lagos at the weekend, Barau, who was represented by the Deputy Director of Banking Supervision, Steve Nwadiuko, said such the restructuring was the only way to avoid massive corporate failure witnessed during the financial crisis of 2007 to 2009, which exposed the weaknesses in many banks.

    He said reforms were needed to strengthen the stability and resilience of the global financial system and prevent the reoccurrence of systematic crisis.

    He said chief finance officers of banks across the globe need to design strategies that would adequately address possible hitches in the financial system.

     

    Bank to bank report

     

    Sterling Bank is set to organise a fashion competition for undergraduates of tertiary institutions in Lagos State. In a statement, the bank said the exercise was meant to discover and celebrate the creativity of the youth.

    The competition, which is part of the bank’s Corporate Social Responsibility (CSR) efforts in the education sector, seeks to transform the perception artistically inclined undergraduates have of themselves in relation to corporate organisations, their acceptability and the difference they can make given the opportunity and a suitable platform.

    The competition tagged “Sketchamania,” is a break from the norm and an unequivocal statement by Sterling bank that it seeks to identify new opportunities to make a difference in a distinct manner by impacting society through deliberate interventions aimed at encouraging and celebrating unique talents, which abound in Nigeria.

    The Managing Director, Bank of Agriculture (BoA), Mr Muhammadu Satunraki, has said the institution would promote agricultural biotechnology.

    He said the development would help in increasing food production. The bank, in a statement, quoted Satunraki as saying that biotechnology is a new field that must be supported to foster growth of the country.

    Fidelity Bank Plc has given out five Hyundai Accent cars to five winners in its ongoing Cars and Cash Savings Splash held in Lagos. Twenty-one other winners also went home with cash prizes ranging from N100, 000, N500, 000 and N1 million.

    Some of the customers, who won cars are Arinzechi Victus, Nwambu Chinwetara, Tansi Grace & Josephine, Umorem Etido Akpan and Maduka Stepenie. Also, Ozoeze Ndidi Amaka won N1 million while Oku Felix and Samuel Emua won N500,000 each. Those who won N250,000 are Paul Abraham, Elizabeth Korgba Nkwa Eze while Nnachi Franklin, among others won N100,000.

    Enterprise Bank customers will henceforth, enjoy additional convenience with the introduction of the lender’s dual purpose prepaid MasterCard used locally and internationally.

    In a statement, the bank said the new addition is a multi-purpose chip and pin debit card that can be pre-funded with cash. The card can then be used to effect cashless payments (like a bank debit card) on the internet, Point of Sale (PoS) terminals and cash from Automated Teller Machines (ATMs).

    It said that the unique benefits of the card, which is open to both customers and non-customers of the bank alike is that the individual would have no need to open or have a bank account in order to have the prepaid card. The card, which can be pre-funded in naira or dollar denominations, is ideal for students, corporate accounts expense cards, estacode, and corporate travel and travel cards among others.

    The card, the bank added, also eliminates the burden of carrying cash around just as it allows its holders to spend more than their approved daily spend limits since both the Personal Travel Allowance (PTA) and Basic Travel Allowance (BTA) are loadable on it.

     

  • El Kanemi get initial 100m Naira

    Nigeria league new boys El Kanemi have got an initial budget of 100m Naira (about $600,000), according to top official Modu Adamu Bata.

    El Kanemi vice-chairman Bata told MTNFootball.com that Borno State Governor Kassim Shettima is very much interested in the club and as such has approved 100 million Naira as first instalment, which the team have assessed.

    “I must tell you we are fully ready for this season, money won’t be our problem Insha Allah because His excellency Governor Kassim Shettima is giving us needed support. He has approved 100 million Naira

    for us as first payment and we have got.,” Bata disclosed.

    “This has allowed us to pay sign-on fee and pay for players’ clearance. We are good for the challenges that the league brings. ”

    El Kanemi have paid 50% of the sign-on fees before the league kicked off and this has already yielded positive dividends as they drew goalless at Nasarawa United in a league opener Sunday.

  • Concerns over naira as election year approaches

    Concerns over naira as election year approaches

    How will the naira fare in 2014, a year before the 2015 general elections?

    It is expected to come under pressure before the election, says an economist, David Cowan.

    Cowan, Director, Africa Economist, Citi, was speaking on Global Economic Update: Europe Casts a long shadow at the EuroFinance conference in Lagos.

    The naira, he explained, had last week, weakened 0.2 per cent against the dollar in the Inter-bank. It also recorded (-one per cent) decline partly due to increased dollar outflows to cover import bills and other forex obligations.

    Recent strengthening of the naira was largely due to dollar supplies from the Nigeria National Petroleum Corporation (NNPC) and robust capital inflow into government securities.This followed the Central Bank of Nigeria’s (CBN’s) decision to hold the interest rate unchanged at 12 per cent on January 21.

    Although the naira has a weakening outlook, the steady rise in reserves to $47.3 billion, which is about 10 months equivalent of imports provides a large cushion to support the naira in the weeks ahead.

    Oil price, he said, would also weaken next year, thereby a putting pressure on the naira.

    He said increased fiscal spending pressure would grow in 2014, adding that there is need to strike a balance between the urban inflation and rural inflation rates in the country.

    On the international scene, he said there were signs that the Indian economy is going to grow aggressively. In emerging market, it is expected that the Asian foreign exchange rally will continue throughout 2014.

    He said the South African Rand is undergoing pressure as the country is running a deficit, Ghana is one of the countries in West Africa that is running the highest fiscal deficit.

    Cowan said there was need for African economies to ensure they are not cut off from global opportunities.

    Senior Partner, Kenna Partners, Fabian Ajogwu, who spoke on Rethinking Corporate Governance, said proper governance of enterprises in Nigeria has become more critical to economic growth than ever.

    “Recent developments in the Nigeria and the current financial and economic crisis put the issue of sustainable development of enterprises at the centre of any economic plan and development strategy,” he said.

    He explained that when companies fail, a lot of attention focuses on how boards discharge their statutory, contractual, and trust-based duties to all stakeholders. He said where the market does not regulate itself properly, the challenge of corporate governance becomes more apparent.

    Director, EuroFinance, Peter Green, explained that the conference enables treasurers and chief finance officers to exchange innovative strategies, best practice and expert opinions. It also focuses on conducting in-debt research with thousands of corporate treasurers worldwide every year, thereby providing insight into the trends and developments in cash management, treasury and objective global viewpoint.

    “We are happy to be having the fourth annual EuroFinance in Lagos. It is important to ensure that all parts of the world are up-to-date on the most current and efficient practices for treasury and cash management, so as best to maximise growth and in turn develop key sectors of local and global economies,” he said.

  • Naira strengthens on oil supply

    Naira strengthens on oil supply

    THE naira gained for a second day, advancing to its strongest in a week as oil firms sold dollars to meet month-end local expenses.

    The currency appreciated by 0.4 per cent to N157.35 per dollar, the strongest intraday level since February 25.

    Oil-producing companies, which sell dollars to meet local expenses around the month-end, are the second-biggest source of foreign currency after the Central Bank of Nigeria, which sells dollars at auctions on Mondays and Wednesdays to help manage the exchange rate.

    The appreciation of the naira is “due to end-of-month dollar sales by international oil companies which increased the supply of the greenback at the interbank market,” analysts at Lagos-based Greenwich Trust Group Limited, led by Oladipupo Adekanmbi wrote in an e-mail to clients.

    The CBN held the benchmark interest rate at a record high 12 per cent for an eighth straight time on January 21 to control inflation and stabilise the naira. The nation’s inflation rate fell to nine per cent in January from 12 per cent in December, the Statistics Bureau said on February 18.

    The yield on the country’s 16.39 per cent domestic bonds due January, 2022 rose two basis points to 10.62 per cent, according to March one data compiled on the Financial Markets Dealers Association website.

    Yields on Nigeria’s $500 million of Eurobonds due January, 2021 fell seven basis points to 4.266 per cent yesterday.

  • Naira weakens on speculation

    The naira depreciated to its lowest in more than two months on speculation that the Central Bank of Nigeria(CBN) will not sell enough dollars to meet demand at auctions this week.

    The currency depreciated by 0.2 per cent to N157.70 per dollar, recording its weakest on a closing basis since December 19, 2012, according to data compiled by Bloomberg.

    The CBN sold $150 million at an auction yesterday, with lenders buying the entire amount on sale, it said in e-mailed statement. The regulator sold $240 million at its two auctions last week, the lowest in five weeks.

    The naira gained as much as 0.2 per cent on February 22 after an oil company was said to sell $100 million. Oil producers, which sell dollars periodically to meet local spending needs, are the second major supplier after the apex bank.

    “Dollar demand increased as dealers speculate the oil industry has finished sales of the U.S currency and that the CBN won’t supply enough to meet demand at interbank trading,” TundeLadipo, Chief Executive Officer of Lagos-based Valuechain Investment Limited, said by phone yesyerday. “Dealers needed more than was supplied at yesterday’s auction.”

    The CBN held the benchmark interest rate at a record high 12 per cent for an eighth straight time on January 21 to control inflation and stabilize the naira.

    The yield on the country’s 16.39 per cent domestic bonds due January 2022 rose eight basis points to 10.56 percent, according to Feb. 22 data compiled on the Financial Markets Dealers Association website.

    Yields on Nigeria’s $500 million of Eurobonds due January 2021 fell six basis points to 4.374 per cent yesterday.