The Nation Newspaper

Tag: Naira

  • Naira trades flat

    Naira trades flat

    The naira traded flat against the U.S. dollar at both the interbank and foreign exchange markets yesterday, as strong demand for the greenback soaked up liquidity from two oil firms and the Central Bank of Nigeria’s currency auction.

    The naira according to Reuters closed at N157.80 to the dollar, around the same level it ended at on Friday.

    At the bi-weekly auction, the CBN increased dollar supply to $200 million, from the $180 million it sold at last Wednesday’s auction, but maintained the rates at N155.78.

    Dealers said the local unit of French oil firm Total sold $44 million to some lenders, while Agip sold around $7 million, but strong demand lapped it up.

    The naira has traded around the N157-158 level to the dollar over the past one month, owing partly to dollar sales from oil companies and inflows from offshore investors buying bonds.

    Dealers expect the currency to hover around current levels throughout the week, as month-end dollar inflows from oil firms boost liquidity.

  • Senate, House to CBN: don’t print N5000 note

    Senate, House to CBN: don’t print N5000 note

    Lawmakers will urge Jonathan to stop Sanusi

     

    AFTER a brief lull, the N5,000 banknote row resurfaced yesterday.

    Senators were angry with Central Bank of Nigeria (CBN) Governor Mallam Sanusi Lamido Sanusi’s insistence on introducing the N5000 banknote.

    They unanimously vowed to stop the CBN from re-denominating and issuing N5000 note.

    It was their first sitting after a long break.

    The lawmakers resolved “to urge President Goodluck Jonathan and the CBN to stop issuance of N5000 note and all issues connected therewith”.

    This followed the unanimous adoption of a motion entitled “Introduction of N5000 notes by the CBN”.

    The motion, sponsored by Rules and Business Committee chair Senator Ita Enang (Akwa Ibom North East) saw Senators express anger over what they described as exhibition of “arrogance, high handedness and claim of monopoly of knowledge” by Sanusi

    Senate President David Mark noted that it was obvious that the argument for the introduction of N5000 “is not convincing”. “The disadvantages of the N5000 note, at the moment, far outweigh not introducing it and, on balance, we should not go for it,” he said.

    Mark said: “I also heard it from the news the way you heard it. I was not briefed. The only briefing I had about this issue was in the national dailies.

    “The important thing is that if Nigerians say they don’t want a particular policy at any given moment, there is no harm in government retracing their stand on the issue and I think that is the situation that we find ourselves.

    “I have listened to the arguments from those who support it, but those arguments are simply not convincing.

    “They appear to me to be highly theoretical and technical in nature and they do not address any practical issue on ground.

    “Any policy that does not address issues directly but just talking about indices we cannot verify for now should wait.

    “We have not reached that level where we are just talking of hypothetical cases all the time.

    “I think the disadvantages of the N5000 notes at the moment far outweigh not introducing it and on balance, we should not go for it.

    “And also, from the contributions on the floor, we are all in support of the fact that the timing is wrong and the policy is unnecessary at the moment and the arguments being advanced is not convincing and there is no urgent need for it to take place now.

    “There is no ambiguity on our stand on the issue. I am not sure that Sanusi is aware of the Constitution. If he was, he would make reference to us before addressing the issue.”

    Deputy Senate President Ike Ekweremadu noted that though he may not be an economist, he understood the implications of the controversial fiscal policy.

    Ekweremadu said on the basis of sovereignty, Nigerians have spoken through their representatives, “it is in the interest of the government to listen and withdraw from this course they are pursuing”.

    Senate Leader Victor Ndoma-Egba (Cross River Central), who seconded the motion described it as timely.

    Ndoma-Egba noted that in a democracy, nobody should claim a monopoly of knowledge or wisdom.

    According to him, monopoly of knowledge and wisdom is strange to democracy and “even if the policy were to be for the good of the people and they say they don’t want it, it is their right to reject something that is even good for them”.

    “This is one moment that our policy makers must listen to every Nigerian, even those in the street, Ndoma-Egba said, adding:

    “In this case, I am not an economist and I don’t pretend to be one, but former heads of state of this nation has spoken.

    “Chief Olusegun Obasanjo has spoken against this policy and, recently, the very respected Yakubu Gowon spoke against it.

    “They may not be economists, as has been alluded, but with their knowledge or lack of knowledge to manage the economy of this country for very many years, we must listen to them.”

    Ndoma-Egba said that Nigerians must reaffirm their commitment to the fight against corruption.

    He said, “We cannot in one breadth be saying we are committed to the fight and in the same breadth we make it convenient for people to move around with millions of Naira in their pockets. So, on those two points, because I believe that there are several other points against but with just these two, I support this motion and urge our other colleagues to support it.”

    Senator Olubunmi Adetunmbi (Ekiti North) said that the debate of the planned redenomination of the naira is important because it has a lot of technical contents as well as emotional aspects.

    He added that the parliament must be able to distinguish between both and be seen to inform the public appropriately.

    He said, “There are about four platforms upon which this policy is predicated and over the period of the holiday, I had the privilege of doing extensive study to find out what really is the motive behind this policy, which has generated a lot of debate.  The very first one is the issue of dollarization.

    “A respected member of the Economic Management Team of Mr President had said and I quote, Mr. Atedo Peterside:

    “Money is a store of value and all these thieves and vagabonds running around the various states and all over the country, when they steal money, they will want to keep it outside the banking system.

    “So, they need higher denominational notes. Right now, they are using the $100 notes all over Nigeria because they are the best store of values for them.

    “If you give them a better store of value, they will move away from dollar and reduce the demands for American notes and move into our currency as opposed to the use of dollars to hide their loot.”

    “This was Atedo Peterside speaking to Nigerian media on the reason why Nigerians should support this policy of government and here we are as a legislature, part of the ruling class that is being referred to, that this note is meant for us to hide loot.

    “This is a serious issue. It is true that the US dollar and British Pounds is a store of value outside the United States and the United Kingdom.

    “You want to store your value in a currency that is stable and hard, not in naira.

    “We need to work naira to the level of reputation that other international currencies are enjoying now before we can position naira to store value locally.

    “We are also told that the equivalent of this N5000 naira is just about 30 dollars.”

    Senator Smart Adeyemi (Kogi West) described the planned fiscal policy as “ungodly, satanic, unconstitutional and uncalled for and does not make reasonable economic sense”.

    Adeyemi cautioned President Jonathan to be wary of some of his aides.

    He said Sanusi has turned out to be one of those misleading Jonathan.

    He said it is ungodly for Sanusi to attempt to divide Nigerians through the introduction of a currency that would be used by only a section of Nigerians.

    Finance Committee chair, Senator Ahmed Makarfi, said the statement by Sanusi that the N5000 is not for every Nigerian is a slight on Nigerians.

    He said that the CBN boss woke up and announced a major fiscal policy, thereby taking Nigerians for granted.

    Enang, in his lead debate, urged the Senate to note that on Thursday, the 23rd of August, 2012, the CBN announced the introduction of the 5000 Naira note as legal tender in Nigeria and the redenomination of the Naira.

    He said the Senate should consider the proposal as a direct negation of the cashless policy of the Jonathan administration, which discourages cash transaction in preference for electronic cashless transactions now in operation.

    He noted that the Senate should be aware that in cashless economies, such as Nigeria, high bills or currency notes, such as the proposed N5000, are not required as transactions are conducted from the payer to the payee’s accounts without any need for physical exchange or handling of cash by either of the parties.

    The Senate, he said, should be worried that the policy will create multiple economic problems, such as inflation, corruption and security challenges, and would erode the value of the nation’s currency and ruin the economy.

    Other Senators who supported the motion included Senators Abdul Ningi, Nurudeen Abatemi-Usman, Isa Galadu, Atai Idoko, Bello Tukur, Mohammed Ali Ndume and Bassey Otu.

  • NLC: Sanusi isn’t convincing on N5,000 note

    NLC: Sanusi isn’t convincing on N5,000 note

    The Nigeria Labour Congress (NLC) yesterday described the Central Bank of Nigeria (CBN)’s plan to introduce N5000 note as a euphemism to formalise devaluation of the  currency.

    The union called for the democratisation of the appointment of the Central Bank governor.

    The union’s Vice President, Comrade Issa Aremu, spoke in Ilorin, the Kwara State capital. He said Sanusi does not know you can’t win the argument without winning the heart of the people. He is winning the argument without convincing the people. He must learn to manage reform, but short therapy approach to reform is unhelpful.

    His words: “CBN has a right and autonomy to manage the country’s monetary policy, but there is a disconnect between the exercise of the autonomy and the broad wishes of the Nigerian people.

    “The introduction of N5000  note is the least resistant monetary policy, it is not bold. All the policy is doing is to legitimise and formalise the devaluation of Naira. When actually the bold policy of the CBN is to make sure that the value of the Naira is strengthened rather allow free fall of Naira. Naira has devalued more under Lamido Sanusi.

     

  • $40b reserves, crude oil prices lift Naira

    $40b reserves, crude oil prices lift Naira

    The naira strengthened against the dollar last week as crude prices and the foreign exchange reserves pushed northwards. The naira rose 0.1 per cent to N157.85 a dollar, putting behind three days of declines of the local currency and increasing confidence that the Central Bank of Nigeria (CBN) can manage its stability.

    The naira has risen 2.8 per cent this year, the best performer in Africa, according to data compiled by Bloomberg.  Nigerian benchmark Bonny Light crude, which has risen 29 per cent from a June low this year, climbed for fifth day rising 0.1 per cent to $116.37 per barrel. The country’s foreign reserves rose to a more than two year high of $40.2 billion on September 11, according to data from CBN’s website.

    The foreign reserves rose to $41.167 billion on September 10, stood at $36.35 billion on August 7; rose to $36.41 in August 8; $36.46 in August 9 and $36.51 in August 10. It had dropped to $36.36 billion in July 20, from $37.19 billion four weeks earlier, losing about $830 million within the period.

    However, the reserves opened the month at $39.2 billion in September 3 and had kept a steady but consistent rise for one week before hitting the current benchmark. The foreign currency reserves rose to $68 billion in August 2008 before the global financial crises impacted negatively on it.

    Analysts at Afrinvest said the CBN needs to build up adequate external reserves to satisfy the genuine needs for foreign exchange as such is consistent with the increase in the growth in economic activity. It will equally assist in conserving resources and withstanding external shocks.

    The apex bank has also said there was urgent need to pursue policies that would foster macro-economic stability, economic diversification as well as encouraging foreign capital inflows.

    It said a higher rate of retention of oil revenues should facilitate the efforts at maintaining exchange rate stability as an antidote to imported inflation without excessive reliance on monetary tightening measures.

    Analysts predicted that Nigeria’s foreign reserves are expected to hit $60 billion by year end as oil production soars. Nigeria’s crude oil production spiked to an all-time high of 2.7 million barrel per day (mbpd) on the 25th of July, the first time in 50 years. This peak represented an increase of 28.57 per cent from the year-to-date average of 2.11 mbpd.

     Market interbank Nigeria’s interbank lending rates climbed to an average of 16.33 per cent on Friday, compared with 13.5 per cent last week, on the back of cash withdrawals by the state oil firm and foreign exchange purchases.

    The secured Open Buy Back (OBB) rose to 15.75 per cent, compared with 12 per cent last week, 3.75 percentage points above the central bank’s 12 per cent benchmark rate, and 5.75 per centage points above the Standing Deposit Facility (SDF) rate. Overnight placement closed at 16.50 per cent, from 14 per cent last week, while call money rose to 16.75 per cent, compared with 14.50 per cent two weeks ago.

    Banks’ capitalisation

    Although Nigerian banks often view their capitalisation as either strong or adequate, Standard & Poor’s (S&P) Ratings Services, a global rating agency, classified their capitalisation as “moderate” or “adequate,” under its criteria.
    S&P said in a report to Reuters that Nigerian banks view their capitalisation stronger than it does because of large amounts of what the lenders classify as surplus capital, above the capital adequacy ratio (CAR).

    “The average CAR for the eight largest Nigerian banks by asset size, according to publicly available financial statements, was 21.1 per cent, versus the 15 per cent regulatory minimum for banks with international operations. However, we calculate that capitalisation was a much lower 6.2 per cent, on December 31, 2011, according to our globally comparable risk-adjusted capital framework,” said Standard & Poor’s credit analyst George Maisey.

    Banknotes, coins Although e-payment is becoming more popular in Africa, banknotes and coins will always be relevant and useful, Central Bank of Nigeria (CBN) Deputy Governor, Tunde Lemo has said.

    Speaking at the Association of African Banknotes and Security Documents Printers (AABSDP) conference in Lagos, he said the cash-less policy of the apex bank is on course.
    Lemo said banknotes and coins will always be useful in consummating transactions.

    He said that the proposed N5, 000 note will reduce cost of banking operations, adding that Africa must embrace change and new technologies in printing of bank notes and minting of coins to keep counterfeiters on check.

    Deloitte, MAN Akintola Williams Deloitte (AWD) and the Manufacturers Association of Nigeria (MAN) have concluded a one day seminar that is geared towards assisting Small and Medium Enterprises to achieve the International Financial Reporting Standard (IFRS) implementation. The IFRS is due to take effect from January 1, 2013.

    IFRS Leader for Deloitte West and Central Africa, Oduware Uwadiae said there are benefits and challenges of IFRS reporting for SMEs, which include IFRS conversion process and the need for early preparation.

    Bond yields Nigerian bond yields are expected to fall around 30 basis points this week as the market prepares for the country’s inclusion in the JP Morgan Government Bond Index – Emerging Markets (GBI-EM) from October. Yields on Nigeria’s 10 and 20-year bonds have shed 300 basis points over the past month on news of the index inclusion, which JP Morgan says could potentially bring up to $1 billion into one of Africa’s most developed debt markets.

    Reueters report said the sharp fall in yields has also been driven by an improved inflation outlook, dealers said. Inflation unexpectedly eased in July to 12.8 per cent year-on-year from 12.9 per cent in June, surprising many analysts.

    Auditors, compliance officers The banking watchdog said there was need to assess skills, qualifications, experience and competencies of staff currently occupying controlled functions in banks. Auditors, compliance officers and other bank staff involved in ensuring that due process is followed in banking operations fall within this group. These were conained in a CBN circular tagged: ‘Assessment of competencies in the Nigerian banking industry’ signed by Y.B Duniya for Director, Financial Policy and Regulation.

    He said such exercise will enable Bankers’ Committee identify at the preliminary stages, gaps that would impede the effective implementation of the Competency Framework for the Nigeria banking industry being appraised by the apex bank. Duniya said that the list of controlled functions is not exhaustive as other important roles and responsibilities may be added.

    N5, 000 banknote/ inflation There is no proven evidence of a correlation between inflation and higher currency denominations, FBN Capital and CEO, Economic Associates, Dr Ayo Teriba said. In a report tagged: ‘New banknote, no inflationary pressure’ FBN Capital said inflation is fuelled by too much money chasing fewer goods and not introduction of higher denomination of banknote.

    The investment and research firm’s view was in response to criticisms against the Central Bank of Nigeria (CBN) currency restructuring programme, which will see N5,000 banknote introduced into the economy early 2013. The currency will become the highest value bill in circulation even as other changes will see the lower denomination bills of N5, N10 and N20 converted into coins. “This will increase the country’s currency structure to 12 from 11, divided equally between coins and notes. As expected, the announcement has generated a lot of controversy,” FBN Capital said in an emailed statement.

    Bank to bank report First City Monument Bank Plc (FCMB) has reassured its various stakeholders and those of FinBank that the two lenders, which have been going through the process of integration will conclude the merger process next month.

    Deputy Managing Director/Executive Director (DMD) of FCMB, Segun Odusanya gave this reassurance in a statement. He said the process is 95 per cent completed. “Our initial target was second quarter of the year, but we got delayed by issues around the Capital Market probe and the removal of the Securities and Exchange Commission Board. Things are now back to normal, and most of the approvals have been obtained,” he said.
    Access Bank’s profit before tax (pre-tax) for the half year to June jumped 143.08 per cent to N30.07 billion as against N12.37 billion in 2011, the bank said in a statement obtained by Reuters.

    Gross earnings rose to N108.75 billion in the same period, compared with N53.65 billion last year. Access Bank, which acquired rescued rival Intercontinental Bank, has proposed an interim dividend of N0.25 per share to its shareholders.

    Fidelity Bank has been adjudged the “Best Telecoms Financing Bank” of the year . The bank won among three other lenders that were nominated for the award at the Eighth Annual Nigerian Telecom Awards held in Lagos.

    The Chartered Institute of Bankers of (CIBN) has commended Unity Bank for collaborating with it in promoting professionalism in the industry. President and Chairman of Council of CIBN Segun Aina disclosed this when he led his members on a courtesy call to the bank in Abuja.

    Aina, who said the institute regards the bank as part of the family, assured his council’s support at all times. He revealed that the institute is putting in place professional programmes aimed at enhancing quality in the industry.

  • Still on the N5,000 note debate

    SIR: The controversy that has trailed the proposed N5, 000 note has refused to surrender, but as usual with every discourse in the Nigerian polity, it has remained a dialogue of the elites, something distastefully referred to as the “dialogue of the deaf”. In a country purportedly made up of about 160 million people (assuming it is not more than that), an economic policy that will affect their already crippled standard of living to its very root, has remained only on the table of the microscopic few who are privileged to be educated and in the same token privileged to have access to the mass media, while the congregation of other less privileged Nigerians, who are only less privileged because their country made them so, have been shut out of the discussion room, only waiting to be served with whatever the outcome is.
    Among the legion of views that have trailed the proposed currency note, various undertones can necessarily be inferred. While some are plainly political views trying to masquerade as economic sense, others are nothing but textbooks economics that seriously has no place in a seriously challenged economy like the Nigerian economy. One of such is the argument by the CBN that the new not would not cause inflation, but the CBN quickly forgets that the new policy is of a twin nature, thus even if the N5,000 note may not cause inflation, the coining of N5, N10, and N20 certainly will.
    Let us consider this: The least transport fare for any route in a place like Osogbo is N20, and in some instances N30, therefore once N20 is coined, is it not only commonsensical that with the kind of payment infrastructure that we have as a country, no bus driver or conductor will ever want to carry loads and loads of N20 coins in his pocket (that is if they have any pocket, because the money is always in the hand)?
    Evidently, given our peculiar circumstances as a people, the next thing that those drivers will simply do will be to raise the fare to the nearest note currency i.e. N50. Is that not inflation? Does that have to be written in any textbook? One wonders while it’s only the CBN policy-makers who do not seem to see this picture. For those in the CBN to so persist in the N5,000 note struggle as they’ve been doing as if it’s a personal ambition they must achieve, are they not suggesting by their body language that there is more to this than just a periodic review of the currency structure?
    Who says the currency re-structuring cannot take place without the introduction of the N5, 000 note and the coins? Must the CBN force coins down the throat of Nigerians when the necessary and supporting infrastructure such as vending machines, e.t.c is totally unavailable?
    The most disgusting part of the entire N5, 000 note propaganda by the CBN, is the total lack of regard for the people, the same people who the policy would affect. For the CBN to tell Nigerians that presidential approval for the project has been secured since November last year, speaks volume of the calibre of men who wield power in Nigeria, and for the Minister of National Planning, Dr. Shamsudeen Usman to come on air and tell Nigerians that the announcement of the new currency note was just to brief the people, simply leaves a bad taste in the mouth.

    • Olusola Adegbite, Esq.
    Town Planning Way, Ile-Ife,

  • Naira eases on strong dollar demand

    Nigeria’s naira eased against the U.S. dollar on the interbank market on Monday after a surge in demand by one lender buying the greenback for its customers, dealers said.
    The local currency closed at 157.80 naira to the dollar, weaker than Friday’s close of 157.55 naira.
    The naira according to Reuter’s news, had firmed to 157 naira level last week from 158 to the dollar after the state-owned energy company NNPC sold around $480 million to some banks.
    “The dollar inflow from the NNPC is gradually thinning out because of a surge in demand, driven by importers who were taking advantage of cheaper dollars to bring forward their obligations,” one dealer said.
    Dealers said the naira should be back at 158 naira level this week as dollar demand continues to reduce market liquidity, unless a major inflow from oil companies come in.
    At the bi-weekly auction, the central bank sold $180 million at 155.78 naira to the dollar, compared with the $200 million it sold at 155.80 naira at last Wednesday’s auction.