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Tag: Naira

  • Will Naira volatility and inflation abate?

    Will Naira volatility and inflation abate?

    Three key issues defined the outgoing year, making it a year of surprises for the economy. The rough ride experienced by the naira, the surge in inflation figures and banks’ brave move to raise additional capital to shore up their capital bases are top picks for the year, writes Assistant Business Editor COLLINS NWEZE

    Olayemi Cardoso assumed the leadership of the Central Bank of Nigeria (CBN), at a time key economy indicators were pointing southwards. The economy faced a stock pile of debts in excess of $108.2 billion, maturing obligations, misaligned currency with over N22 trillion printed bank notes stoking inflation, high interest rates, Foreign Direct Investment (FDI) draught and acute dollar shortage.

    The debilitating and lingering effects of the CBN-led naira redesign policy and subsequent cash crunch had put the GDP figures in disarray.

    The oil sector, which contributes more than 50 per cent of government revenue and over 80 per cent foreign exchange earnings shrank. The deterioration in the sector’s performance was primarily as a result of lower oil production due to persistent oil theft, pipeline vandalism and frequent declarations of force majeure, negatively impacted dollar inflows that worsened naira stability.

    The task of turning the above negative economic indicators around, led the CBN to  embark on a series of bold reforms considered long overdue. The reforms were unveiled and their implementation took off immediately including exchange rate unification.

    Exchange rate reforms and unification saw the naira recording significant decline at both official and parallel markets.

    Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, said the exchange rate unification policy was bold and courageous.

    He said: “Exchange rate management goes beyond exchange rate unification. It must address issues surrounding market structure, easy access and adequate supply. This means effectively dismantling forex rationing, administrative controls and reviewing import restrictions.”

    Despite its numerous setbacks, Rewane insisted that the current exchange rate framework has brought about transparency in the forex market, reduced exchange rate misalignment and transaction costs, and opened the economy to offshore investors.

    The CBN, also within the year took steps to expand FX sources. For instance, Nigeria’s source of funds from the diaspora, Nigerians living and working abroad who have families here and who are interested in keeping a presence here. We have to encourage them to save in Nigeria perhaps by improving payment mechanisms.”

    The naira has maintained relative stability in the foreign exchange market, bolstered by inflows from the Nigerian diaspora returning home for Christmas, proceeds from a recent Eurobond issuance, and enhanced market transparency introduced by the Central Bank of Nigeria (CBN).

    These factors have contributed to improved liquidity and confidence in the foreign exchange market, with the naira trading within a range of N1,660 to N1,525 per dollar in the official market and remaining stable at around N1,660 in the parallel market.

    The stability in the naira has been largely attributed to the CBN’s implementation of the Electronic Foreign Exchange Matching System (EFEMS), which has improved transparency and efficiency in FX trading.

    Charlie Robertson, Head of Macro Strategy at FIM Partners UK Ltd, noted that the naira’s performance may also be influenced by proceeds from Nigeria’s recent Eurobond issuance and the seasonal increase in dollar inflows from the diaspora.

    Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), highlighted the transparency brought about by the EFEMS platform. He explained that clearer information on supply and demand has reduced information asymmetry and made demand more realistic. Yusuf also emphasised the importance of CBN interventions and rising external reserves, which have bolstered investor confidence and mitigated panic.

    Aminu Gwadabe, President of the Association of Bureaux De Change of Nigeria (ABCON), observed that the naira’s appreciation was influenced by CBN interventions in the EFEMS market, and called for increased liquidity in the retail exchange market through Bureaux De Change (BDCs), so as to stabilise rates further. Gwadabe suggested leveraging BDCs as effective tools for managing volatility and achieving budgetary exchange rate targets.

    Read Also: EXPLAINER: What constitutes Naira abuse, penalties involved

    Inflation

    Inflation Rate in Nigeria increased to 34.60 per cent in November from 33.88 per cent in October of 2024.

    Inflation Rate in Nigeria is expected to be 34.00 per cent by the end of this quarter, according to Trading Economics global macro models and analysts expectations

    To tackle the pressing challenge of inflation, the CBN acted decisively by raising the Monetary Policy Rate by 875 basis points to 27.5 per cent in 2024.

    While the Central Bank will continue to lay the foundation for price stability and foster a conducive policy environment, the role of banks in this journey is equally crucial.

    An FX market defined solely by when and how the CBN buys or sells dollars is inadequate for the needs of a dynamic economy like Nigeria’s.

    Now is the time for banks to step up their intermediation and market-making responsibilities, providing customers with the right solutions to run their businesses and manage risks effectively.

    CBN’s efforts to improve the functioning of our FX market yieded the desired impact in the review period. Average daily turnover in the Nigerian Autonomous Foreign Exchange Market increased by 226 per cent in the 1st half of the year when compared to the same period in 2023.

    Foreign portfolio inflows increased by over 72 per cent during this period, while foreign exchange reserves have risen from $32 billion in May 2023 to over $40 billion. This represents the equivalent of eight months’ import cover and marks the highest reserves level in nearly three years.

    The market has also supported over $9 billion in capital outflows over the past year as investors were able to freely repatriate capital and dividends without the need to wait for several months as experienced in the past.

    These results reflect improved confidence in the reforms embarked on. In addition, there was a $6 billion current account surplus in the first half of 2024 as a result of the impact of these reforms.

    Reduction in petroleum product imports supported by improved domestic refining capacity, a growing focus on non-oil exports and higher remittance inflows helped to support the positive current account balance.

    Recapitalisation of banks

    The CBN had on March, 28, 2024 announced a two-year bank recapitalisation exercise which commenced on April 1, 2024, and is expected to end on March 31, 2026.

    The recapitalisation plan requires minimum capital of N500 billion, N200 billion, and N50 billion for Commercial Banks with International operations, National and Regional licenses respectively.

    Cardoso said the recapitalisation policy not only strengthens financial stability but also serves as a catalyst for inclusive growth.

    According to Cardoso, ongoing recapitalisation of banks was in line with CBN’s efforts to deepen financial inclusion, and support growth of key businesses.

    He said: “This strategic move ensures that banks are well-capitalised, enabling them to take on greater risks, particularly in underserved markets. With stronger capital bases, banks can provide more loans and financial products to Micro Small and Medium Enterprises (MSMEs), rural communities, and other vulnerable segments that have previously struggled to access formal financial services”.

    “By enabling banks to extend more credit to MSMEs, we enhance job creation and productivity. Furthermore, with increased capital, banks can invest in technology and innovation, which is crucial for driving digital financial services such as mobile money and agent banking. These technologies are key to breaking down geographic and economic barriers, bringing financial services to even the most remote areas,” he stated.

  • Experts project healthy naira, low inflation early 2025

    Experts project healthy naira, low inflation early 2025

    Contrary to wide expectations, the Naira is projected to rise in value against the greenback in early 2025 just as the hyperinflation rate will ease considerably, amongst other positive fundamentals, experts have said.

    The duo of Dr. ‘Biodun Adedipe and Mrs. ‘Laide John, both of B. Adedipe Associates Limited (BAA Consult), gave this blessed assurance during the recent interface and discussion session at the FirstBank Nigeria Economic Outlook 2025.

    The FirstBank Nigeria Economic Outlook is designed to consider various indicators and factors, including monetary policies, government spending, trade relations, and global economic conditions with the crop of experts that would be at the session.

    Firing the first salvo, Dr. Adedipe, founder/Chief Consultant at B. Adedipe Associates Limited (BAA Consult), recalled that the Naira exchange rate stability envisaged before end-H1’2024 happened.

    Read Also: Naira abuse: EFCC confirms invitation of Okoya’s sons for questioning

    According to him, the expected average official rate at end-2024 N1,452.13/$ and PM average of N1,516.02/$, noting that the pressure on FX should be moderated by Naira sale of crude oil to local refineries, CBN clearing of FX backlog, high MPR to drive FX inflow (largely FPI) that may reverse when MPR begins southward adjustment.

    “Inflation is expected to reach an inflection point in the early part of 2025, causing a potential downward trajectory of MPR. Tightening by CBN, effects of tax reforms (if implemented), and supply-side bottleneck issues tamed should result in a reduction in Inflation rate. If you consider official disbursements, remittances, portfolio inflows, and lower imports amid rising domestic refining production and the impact of currency depreciation on domestic demand.”

    Pressed further, Adedipe said, “The envisaged rebound is promising. There are promising movements in dealing with food and manufacturing deficits. If the energy deficit gets firmly on the reform train, the Nigerian business environment should become very, very interesting. The chances are about 70%!”

  • Naira firms up, stock market surges after President’s media chat

    Naira firms up, stock market surges after President’s media chat

    • Financial experts review TV interview

    Economic and finance experts have said President Bola Ahmed Tinubu’s Monday media chat showed admirable grasp and clarity of thoughts on the nation’s macroeconomic outlook.

    The financial markets reacted positively yesterday, in the first trading day after the presidential media chat.

    The naira firmed up, it appreciated by four basis points to N1,540.33 per dollar. At the stock market, the benchmark equities index rose by 829.88 points to a new recent high of 102,186.03 points, implying net capital gain of N503 billion.

    Reacting to the one-hour, live engagement between the president and senior journalists, business experts said the president showed a commendable understanding of policy expectations and outcomes, which could further reinforce confidence in the overall economy.

    Hajiya Maryam Shettima, described the president’s media chat as a demonstration of strong leadership, which is already impacting more public confidence in his administration.

    Managing Director, AIICO Capital, Dr Femi Ademola, said the president’s macroeconomic thoughts were in line with general expectations.

    According to him, the presidential media chat provided very good opportunity to hear the thoughts of the president directly from him and he delivered his thoughts and actions quite very well.

    “I am generally okay with his responses especially concerning the economic reforms such as fuel subsidy removal, the tax reform bills and the progress on security,” Ademola, a Chartered Financial Analyst (CFA), said.

    He noted that while the president’s candour and lack of political correctness could be misread as lacking in emotion, the president showed confidence and ability to deliver on his electoral promises.

    Read Also: FG, AU launch initiative to empower women, youth in livestock markets

    He, however said the government needed to  justify the need for borrowing and its cabinet size by outlining clear deliverables expected from such decisions.

    “Be that as it may, the media chat is very welcome and I hope it continues regularly as it is an opportunity to inform and educate the people directly on what the government is doing. Communication with the people should be honest, direct, simple and humble,” Ademola said.

    Managing Director, Arthur Steven Asset Management, Mr Olatunde Amolegbe, said the president showed consistency of thoughts that reinforced confidence that with steady progress, Nigeria will gradually surmount current challenges.

    He said: “I think on the economic front, the president was clear as to the challenges the economy is facing and what it will take to surmount them. I am glad that he recognised that monetary policy could do only so much to tackle the issue of inflation and he articulated the fiscal and structural issues he would aim to tackle in order to control inflation”.

    He noted that the move towards a full liberalization of the economy appeared hard on the citizen because of historic default to subsidies and patch-ups, adding that a continuation of the ongoing policies would lead to a sustainable economic rebirth.

    “I believe if we stay the course, as the president insists he would, then there should be light at the end of the tunnel,” Amolegbe, a former president of Chartered Institute of Stockbrokers (CIS), said.

    Managing Director, HighCap Securities, Mr. David Adonri, said Tinubu’s delivery was both inspiring and educative.

    “I listened to President Tinubu’s first media chat, quite an inspiring performance by him. He exhibited sound knowledge of economics and public finance. The programme was informative, engaging and confidence boosting.

    “More of such chat should be organised to enable the public understand the president’s thoughts and the philosophy behind his administration’s policies, a glimpse of which he shared on Monday,” Adonri, a senior investment banker, said.

    At the stock market, investors showed strong appetite across the sectors of the economy.  Average year-to-date return for Nigerian equities climbed to 36.7 per cent, making Nigeria one of the three best-performing stock markets globally.

    There’s nearly analysts’ consensus that Nigerian stock market would close the year stronger.

    Analysts at Afrinvest West Africa said they expected the market “to sustain its broad-based bullish performance as investors continue with strategic portfolio realignment, ahead of the new year”.

    Shettima said ongoing reforms were indeed timely, considering Nigeria’s current economic landscape, adding that the removal of petrol subsidy, unification of exchange rates, and the financial sector reforms aimed at correcting market distortions and promoting economic stability are already manifesting results.

     Tinubu on Monday made a passionate appeal to Nigerians to have faith in his administration during the inaugural presidential media chat in Lagos.

    He emphasised that despite being only 18 months old, his government is headed in the right direction and marks the beginning of a glorious era.

    In her reaction to the takeaways from the presidential media chat, Shettima, through her media office emphasised that the president explicitly conveyed his empathy and support for the ideals of Restoration and Hope, demonstrating his commitment to uplifting the country economically.

    She added that the president’s exemplary leadership, highlighting his responsiveness to the nation’s needs and willingness to take bold steps, even in the face of adversity.

    Notably, she said Tinubu “has refrained from blame game, instead expressing his commitment to shouldering the responsibilities of leadership, a trait that underscores his accountability, transparency and strong sense of ownership”.

    Said she: “Mr. President has demonstrated to Nigerians that he does not only care but is responsive. He has not shied away from all the decisions he has taken since he assumed office 18 months ago, despite the challenges that came with them. He hasn’t blamed anyone for any reason, rather he keeps telling Nigerians that he asked for the job and he will live up to expectation. This is what leadership is all about.

    “By engaging in direct dialogue with the public, this administration has effectively bolstered the people’s trust and faith in its leadership. This approach has further helped to foster a sense of transparency and accountability, which is essential for building strong relationships between the government and its citizens. Through this engagement, the President, again has been able to communicate policies, decisions, and visions directly to the public. These engagements build public trust, shape public opinion, and demonstrate leadership, allowing the president to address concerns, showcase his capacity, and influence the national agenda”.

    On the ongoing reforms in various sectors of the economy, Shettima appealed to Nigerians to be prepared to withstand short-term challenges associated with the ongoing economic reforms, just as China did, in order to reap the long-term benefits.

    She also  hailed President Tinubu’s deliberate approach to implementing these reforms,  urging Nigerians to support him while also constructively criticising areas that require improvement”.

     She said: “It is imperative that we acknowledge and applaud the sweeping reforms implemented across various sectors, which are reinvigorating Nigeria’s economic landscape. Most of these reforms are timely and these are necessary sacrifices that patriotic Nigerians must make for the betterment of the country and future generations.

    “This collective effort will ultimately determine the success of the reforms. The administration’s commitment to transparency and dialogue is crucial in navigating the challenges associated with the reforms. The anticipated benefits of these reforms, including improved economic stability, increased investor confidence, and enhanced competitiveness, make them a crucial step towards Nigeria’s economic revival.

    “The administration’s bold policy initiatives on fuel subsidy, though initially daunting, are yielding tangible dividends. This bold move has been instrumental in freeing up resources for critical infrastructure development, social welfare programmes, and human capital development.

    “The recent decline in petroleum pump prices nationwide can be attributed to the positive impact of market competition, as seen with the operationalization of the Dangote refinery and the Port Harcourt refinery. The crude-for-naira deal has also contributed to this downward trend. As more players, such as BUA and others, enter the market, we can expect even greater competition, which will likely lead to further reductions in pump prices.

    “The financial sector, the lifeblood of any economy, has witnessed significant reforms under President Tinubu’s leadership. The administration’s commitment to strengthening the financial system is evident in the establishment of a robust framework for banking operations. This has enhanced the stability and resilience of Nigerian banks, positioning them to support the country’s economic growth.

    “Furthermore, the government has introduced measures to deepen financial inclusion, ensuring that more Nigerians have access to formal financial services. This initiative has been bolstered by investments in digital infrastructure, facilitating the proliferation of fintech services and mobile banking platforms.

    “The agriculture sector has received a major boost as seen in the 2025 budget with a difference of over 100 per cent  allocation compare to previous year. Just this week, the  President approved N95 billion for the rehabilitation of over 16 Kano dams to boost irrigation farming and the construction of the state Eastern Bypass Road, which will connect the southern region to the city. This is huge, particularly for my people in Kano State and neighbouring states.

    “The administration has also implemented policies to attract private sector investment in agriculture, recognizing the critical role that the sector can play in creating jobs, generating revenue, and ensuring food security.

    “The Nigeria’s infrastructure sector has received considerable attention. This has been evident in the massive investments in road construction, rail development, and aviation infrastructure. These projects are not only creating jobs and stimulating economic activity but also enhancing the country’s competitiveness and business environment.

     “The reforms implemented across various sectors, though challenging in the short term, hold immense promise for long-term prosperity and stability. I appeal to Nigerians to rekindle their faith in President Tinubu’s leadership and the Renewed Hope Agenda”.

  • Naira rebounds as speculators dump dollar

    Naira rebounds as speculators dump dollar

    • Closes at N1515/$ in parallel market
    • FX speculators lose N10b in naira rally
    • Nigeria recorded N5.8trn trade surplus in Q3 2024 – NBS
    • FG taking practical steps to revamp economy – Cardoso

    The naira yesterday recorded a major leap, one of its biggest in nearly one year.

    It closed at N1,515 to the  dollar, representing N200 gain from N1,715 to the dollar recorded on Thursday.

    The naira appreciation came amidst a report by the National Bureau of Statistics (NBS) crediting Nigeria with a N5.81trillion trade surplus in the third quarter of 2024 (Q3 2024).

    The country’s total merchandise trade stood at ₦35,160.44 billion during the period under review.

    According to parallel market traders, the naira appreciated to N1,730/$ on Monday — from the N1,735/$ traded on November 29.

    The naira appreciated further, trading at N1,725/$ on Tuesday, and N1,695/$ on Wednesday.

    Yesterday’s closing rate represents a significant improvement for the national currency, strengthening below N1,600 in nearly six months.

    This gain came as traders offloaded dollars in response to the Central Bank of Nigeria’s (CBN) new foreign exchange (FX) framework.

    The naira also recorded gains at the official market, appreciating by 2.08 per cent, or N32, as the dollar was quoted at N1,535 yesterday compared to Thursday’s closing rate of N1,567 at the Nigerian Foreign Exchange Market (NFEM), according to CBN data.

    Analysts said FX speculators have lost over N10 billion during the current naira rally and will record more losses as the greenback holders dump it in the open market. 

    They said the era of forex speculation and distortions in the domestic foreign exchange market came to an end on December 2 after the CBN-backed Electronic Foreign Exchange Matching System (EFEMS) began operations.

    Observers say the recovery of the naira shows the effectiveness of the CBN’s strategic interventions in the FX market.

    Market analysts point to the improved price discovery mechanism facilitated by the Bloomberg BMatch platform as a catalyst for increased confidence among market participants.

    The Bloomberg BMatch system is an automated trade-matching platform introduced to enhance transparency and operational efficiency in the FX market.

    Traders have reportedly responded positively to the automated system, which reduces discrepancies in pricing and enhances liquidity.

    The resultant reduction in speculative trading has contributed to the stabilization of the naira in both official and unofficial markets.

    The implementation of the FX policy, announced last month, and confirmed by CBN Governor, Olayemi Cardoso at the 59th Bankers Annual Dinner organised by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos, came with diverse implications for all segments of the financial markets that deal in forex, including rebound in the value of the naira across markets.

    Speaking at the event, Cardoso described EFEMS as one of the many gains of the exchange rate unification policy expected to birth several other gains in the market operation.

    He said the policy would not only put forex market distortions under check, eliminate speculative activities and instill transparency, but would also make it difficult for abuse in the market to persist.

    He said: “On the 2nd of December 2024, the foreign exchange market will begin trading on the electronic FX matching system to further enhance transparency, restore confidence, and attract new investments.

    “Coupled with an improved framework for deploying products targeting the Nigerian Diaspora and efforts to establish a well-functioning FX market, we anticipate increased Diaspora and foreign investments over the next 12 months, building a more resilient and liquid FX market.”

    Cardoso said an enabling policy environment has led to the doubling of monthly remittances from an average of $300 million in 2023 to nearly $600 million in August 2024.

    “We are committed to further integrating the Nigerian Diaspora into our financial system, exemplified by the introduction of the non-resident Bank Verification Number registration.

    “We expect our financial institutions to develop products that not only enable the Diaspora to support their families but also provide opportunities for savings and investment in Nigeria,” Cardoso said.

    Cardoso said the current exchange rate for the naira does not reflect the true value of the local currency.

     He said the current US dollar exchange rate reflects the price that the most desperate buyers are willing to pay, and this, in the apex bank’s view, does not represent the true market value of the naira.

    The CBN boss said the apex bank expects that the introduction of the electronic marketing system will correct these distortions by enhancing price discovery process for the naira.

    Besides, he expects the move to significantly boost the apex bank’s oversight and integration capabilities, ensuring a more stable and transparent foreign exchange market.

    Cardoso also said that an FX market defined solely by when and how the central bank buys or sells dollars is inadequate for the needs of a dynamic economy like Nigerians.

    “Now is the time for banks to step up to their intermediation and market making responsibilities providing customers with the right solutions to run their businesses and manage risk effectively,” he said.

    On his part, President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said the take-off of the EFEMS is a step in the right direction.

    According to him, the EFEMS will not only bring sanity to the market but ensure that new entrants into the market, including post recapitalisation Bureau De Change Operators, will simply fit it, and follow set guidelines that promote transparency and accountability.

    Gwadabe said: “It is a good development as the CBN has cleared post recapitalization BDCs to participate in the new EFEMs platform.

    “Section 2.0 of the BDCs operational guidelines recognises post-recapitalisation BDCs to participate in the EFEMS by purchasing interbank proceeds from banks.”

    He said the move will boost forex liquidity in the retail end of the market, achieve price discovery and enhance transparency and regulatory policy oversight.

    He added: “It is in line with our advocacy for a unified, centralised and democratised foreign exchange market.

    “We wish the policy is effective before the conclusion of the BDCs recapitalization process.

    “It is another spice to encourage BDCs in meeting the new recapitalisation requirements and raises hope for members and new entrants into the forex market.”

    The EFEMs journey started with a circular signed by Omolara Duke, director of Financial Markets Department.

    According to the bank, under this system authorised dealers will conduct all forex transactions in the inter-bank market on the EFEMS system approved by the CBN, where transactions will be reflected immediately.

     “The new system is expected to enhance governance, transparency and facilitate a market-driven exchange rate that will be accessible to the public.

    “This development is expected to reduce speculative activities, eliminate market distortions and give the CBN improved oversight capabilities to effectively regulate the market,” the apex bank noted.

    The CBN said it will publish real-time prices and buy/sell orders from the system. It said in collaboration with the Financial Markets Dealers Association, it will publish the rules for the EFEMS.

    It further said that the Nigerian FX Code and the Revised Market Operating Guidelines for the forex market will also provide guidance to market participants.

     “Authorised dealers are therefore required to comply with extant guidelines and regulations governing the Nigeria foreign exchange market and ensure that all necessary documentation, training and systems integrations are concluded ahead of the go live date.”

    Analysts said the system is expected to instantly reflect data on all FX transactions conducted in the interbank market and approved by the CBN.

    The CBN will also publish real time prices and buy/sell orders data from this system.

    Nigeria is facing an acute forex crisis, but there have been market distortions by speculators and illicit traders, which worsen the nation’s dollar availability.

    Hence the system was launched in a bid to give the CBN improved oversight capabilities to effectively regulate the market, reduce the rate of speculation and stabilise the foreign exchange market.

    The CBN will publish the rules of engagement for the EFEMS for both authorised dealers and buyers, in collaboration with the Financial Markets Dealers Association (FMDA).

    The Nigerian FX code and the revised market operating guidelines are also available to provide guidance to market participants.

    Nigeria records N5.81tr trade surplus in Q3 2024

    The National Bureau of Statistics (NBS) yesterday said Nigeria recorded N5.81trillion trade surplus in the third quarter of 2024 (Q3 2024).

    The country’s total merchandise trade stood at ₦35,160.44 billion during the period under review.

    This was contained in a document entitled “Trade in Goods Statistics Q3 2024.”

    According to the document, Nigeria exported goods of N20.48 trillion and imported goods worth NN14.67 trillion during the period.

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    The document showed that Nigeria earned N13.40 trillion from crude oil and N7.08 trillion.

    It put  Nigeria’s total merchandise trade at  N35.16 trillion in Q3, 2024, which represents an increase of 81.35% compared to the value recorded in the corresponding period of 2023 and a rise of 13.26% over the value recorded in the preceding quarter.

     In the quarter under review, NBS said “exports accounted for 58.27% of total trade with a value of ₦20.486.39 trillion, showing an increase of 98.00% rise over the value recorded in the third quarter of 2023 (N10.346.60 trillion) and 16.76% compared to the value recorded in Q2 2024 (N17.545.62 trillion).

    “Nigeria’s exports trade continued to be dominated by crude oil exports, in the third quarter of 2024, crude oil export was valued at N13.406.37 trillion representing 65.44% of total exports while the value of non-crude oil exports stood at N7. 080.02 trillion, accounting for 34.56% of total exports; of which non-oil products contributed N2.501.85 trillion or 12.21% of total exports.”

    On import, NBS said: “During the third quarter of 2024, total imports were valued at N14.674.05 trillion, accounting for 41.73% of total trade.

    “Using the Standard International Trade Classification, the top-ranked group import was ‘mineral fuels’ with N5.140.10 trillion representing 35.03% of total imports. This was followed by “machinery and transport equipment” with N3.782.19 trillion (25.77% of total imports) and ‘Chemicals & related products’ with N1.73.01 trillion (13.45% of total imports).”

    The document said Nigeria imported goods mainly from Asia, valued at N7.290.86trillion representing 49.69% of total imports.

    It said this was followed by imports from Europe with N5.355.92 trillion or 36.50%, America with N1.440.79 trillion or 9.82%, while imports from Oceania stood at N73.91 trillion or 0.50% in the third quarter of 2024.

    NBS said trade with African countries stood at N512.56 billion or 3.49% of total imports of which imports from ECOWAS countries amounted to N72.71 billion or 0.50% of total imports.

    Imports from China were valued at N3.574.79 trillion, representing 24.36% of total imports.

  • CBN’s Bloomberg BMatch System Spurs Naira Recovery to N1,515/$

    CBN’s Bloomberg BMatch System Spurs Naira Recovery to N1,515/$

    …boosts market transparency

    The Central Bank of Nigeria’s (CBN) directive mandating banks operating in the interbank FX market to adopt the Bloomberg BMatch trading platform has begun yielding positive outcomes. 

    The Naira, which had experienced severe depreciation in recent months, recorded a remarkable recovery in both official and parallel markets.

    On Friday, the Naira closed at N1,515 to the dollar in the parallel market, reflecting a 2.08 percent appreciation from the previous day. 

    This is a significant improvement from its low of N1,755 per dollar on November 21, 2024, prior to the implementation of the new FX policy. 

    The currency’s 18.8 percent recovery in the black market—equivalent to N240—has been attributed to traders offloading dollars in response to the new framework introduced by the CBN.

    At the official market, the Naira also gained ground, appreciating by 2.08 percent, or N32, to close at N1,535 to the dollar on Friday. 

    This is an improvement from Thursday’s closing rate of N1,567, according to data from the Nigerian Foreign Exchange Market (NFEM). 

    Since the Bloomberg BMatch system became operational on December 2, 2024, the currency has strengthened by 8.97 percent, or N137.69, from its November 29 closing rate of N1,672.69.

    The Bloomberg BMatch system is an automated trade-matching platform introduced to enhance transparency and operational efficiency in the FX market.

    The platform, launched on December 2, 2024, enables seamless trading and uniformity among participants, addressing long-standing concerns about market opacity and inefficiency.

    In a statement, Omolara Duke, Director of the Financial Markets Department at the CBN, described the Bloomberg BMatch platform as a transformative tool for the FX market. 

    “This initiative represents a significant advancement in ensuring uniformity and seamless operations among market participants,” she said in a circular addressed to banks.

    To further enhance market operations, the CBN last week issued detailed guidelines for the interbank FX trading system under the Electronic Foreign Exchange Matching System (EFEMS). 

    The guidelines stipulate a minimum tradable amount of $100,000, with incremental clip sizes of $50,000, aiming to foster greater transparency and efficiency.

    Read Also: Shettima launches 2024 Nigeria Economic Report, promises inclusive growth

    The recent recovery of the Naira shows the effectiveness of the CBN’s strategic interventions in the FX market. Market analysts have pointed to the improved price discovery mechanism facilitated by the Bloomberg BMatch platform as a catalyst for increased confidence among market participants.

    Traders have reportedly responded positively to the automated system, which reduces discrepancies in pricing and enhances liquidity. 

    The resultant reduction in speculative trading has contributed to the stabilization of the Naira in both official and unofficial markets.

    The CBN’s decision to mandate the Bloomberg BMatch system is seen as part of broader efforts to restructure Nigeria’s FX market and improve its integrity. 

    Prior to this, the market had been plagued by volatility and inefficiencies, leading to significant disparities between official and parallel market rates.

    The CBN remains optimistic about the platform’s potential to sustain the Naira’s recovery. By enhancing transparency and fostering greater market discipline, the central bank aims to position Nigeria’s FX market as a model of efficiency in the region.

    While the gains recorded so far are encouraging, financial experts caution that sustained recovery will depend on consistent policy implementation, adequate FX supply, and effective regulation to curtail market distortions.

    As the Bloomberg BMatch platform continues to gain traction, the Naira’s recovery signals a positive turn for Nigeria’s FX market. 

    The CBN’s commitment to innovative solutions and stringent regulatory measures highlights a renewed focus on stability and investor confidence.

  • Naira to rebound as CBN FX matching system begins operation

    Naira to rebound as CBN FX matching system begins operation

    • Analysts: Days of forex speculation, distortions over

    The era of foreign exchange (forex) speculation and distortions in the domestic forex  market is over as the Central Bank of Nigeria (CBN)-backed Electronic Foreign Exchange Matching System (EFEMS) begins operation today.

    The implementation of the forex policy, announced last month, and confirmed by CBN Governor, Olayemi Cardoso at the weekend, comes with diverse implications for all segments of the financial markets that deal on forex, including expected rebound in the value of the naira across markets.

    The naira exchanges at N1,720 to dollar at the parallel market, and below N1,663 to dollar at the official window.

    Analysts said the system is expected to instantly reflect data on all forex transactions conducted in the interbank market and approved by the CBN.

    The CBN will also publish real time prices and buy-sell orders data from this system.

    Nigeria is facing an acute forex crisis, but there have been market distortions by speculators and illicit traders, which worsen the nation’s dollar availability.

    Hence the system was launched in a bid to give the CBN improved oversight capabilities to effectively regulate the market, reduce the rate of speculation and stabilise the foreign exchange market.

    The CBN will publish the rules of engagement for the EFEMS for both authorised dealers and buyers, in collaboration with the Financial Markets Dealers Association (FMDA).

    The Nigerian forex  code and the revised market operating guidelines are also available to provide guidance to market participants.

    Read Also: 23 surprising facts about Tinubu’s Tax Reform that could change everything

    President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said the takeoff of the EFEMS is a step in the right direction.

    According to him, the EFEMS will not only bring sanity to the market, but ensures that new entrants into the market, including post recapitalisation Bureau De Change Operators- will simply fit it, and follow set guidelines that promote transparency and accountability.

    Gwadabe said: “It is a good development as the CBN has cleared post recapitalization BDCs to participate in the new EFEMs platform. Section 2.0 of the BDCs operational guidelines recognizes post-recapitalisation BDCs to participate in the EFEMS by purchasing interbank proceeds from banks”.

    He said the move will boost forex liquidity in the retail end of the market, achieve price discovery, enhance transparency and regulatory policy oversight.

    He added: “It is line with our advocacy for a unified, centralized and democratized foreign exchange market. We wish the policy is effective before the conclusion of the BDCs recapitalization process. It is another spice  to encourage BDCs in meeting the new recapitalisation requirements and raises hope for members and new entrants into the forex market”.

    Speaking at the 59th Bankers Annual Dinner organised by Chartered Institute of Bankers of Nigeria (CIBN), in Lagos, the Cardoso described EFEMS as one of the many gains of the exchange rate unification policy, expected to birth several other gains in the market operation.

    He said the policy will not only put forex market distortions under check, eliminate speculative activities and instill transparency, but will also make it difficult for abuse in the market to persist.

    He said: “On the 2nd of December 2024, the foreign exchange market will begin trading on the electronic FX matching system to further enhance transparency, restore confidence, and attract new investments.”

     “Coupled with an improved framework for deploying products targeting the Nigerian diaspora and efforts to establish a well-functioning FX market, we anticipate increased diaspora and foreign investments over the next 12 months, building a more resilient and liquid FX market”.

    Cardoso said an enabling policy environment has led to a doubling of monthly remittances from an average of $300 million in 2023 to nearly $600 million in August 2024.

     “We are committed to further integrating the Nigerian diaspora into our financial system, exemplified by the introduction of the non-resident Bank Verification Number registration. We expect our financial institutions to develop products that not only enable the diaspora to support their families but also provide opportunities for savings and investment in Nigeria,” Cardoso said.

    Cardoso said the current exchange rate for the naira does not reflect the true value of the local currency.

    He said the current US dollar exchange rate reflects the price that the most desperate buyers are willing to pay, and this, in the apex bank’s view, does not represent the true market value of the naira.

    The CBN boss said the apex bank expects that the introduction of the electronic marketing system will correct these distortions by enhancing price discovery process for the naira.

     Additionally, he stated that the move will significantly boost the central bank’s oversight and integration capabilities, ensuring a more stable and transparent foreign exchange market.

    Cardoso also said that an FX market defined solely by when and how the central bank buys or sells dollars is inadequate for the needs of a dynamic economy like Nigerians.

    “Now is the time for banks to step up to their intermediation and market making responsibilities providing customers with the right solutions to run their businesses and manage risk effectively, “ he said.

    The EFEMs journey started with a circular signed by Omolara Duke, director of Financial Markets Department, the bank said with this system, authorised dealers will conduct all forex transactions in the inter-bank market on the EFEMS system approved by the CBN, where transactions will be reflected immediately.

     “The new system is expected to enhance governance, transparency and facilitate a market-driven exchange rate that will be accessible to the public.  This development is expected to reduce speculative activities, eliminate market distortions and give the CBN improved oversight capabilities to effectively regulate the market,” the apex bank noted.

    The CBN said it will publish real-time prices and buy/sell orders from the system. The CBN noted that in collaboration with the Financial Markets Dealers Association, it will will publish the rules for the EFEMS.

    It further said that the Nigerian FX Code and the Revised Market Operating Guidelines for the forex market will also provide guidance to market participants.

     “Authorised dealers are therefore required to comply with extant guidelines and regulations governing the Nigeria foreign exchange market and ensure that all necessary documentation, training and systems integrations are concluded ahead of the go live date.”

  • Illegal forex, a threat to Naira stability – Ex-APC South Africa Chairman

    Illegal forex, a threat to Naira stability – Ex-APC South Africa Chairman

    Mr Bola Babarinde, a former Chairman of the All Progressives Congress (APC) in South Africa, has identified illegal foreign exchange (Forex) trading as a threat to Naira stability and eroding its integrity.

    Babarinde in a statement on Tuesday said that the issue of illegal forex trading had plagued the country for decades, thereby impeeding economic progress.

    He said that in the 1970s, during Nigeria’s military rule, forex trading was strictly controlled, with several bank executives and individuals prosecuted for engaging in foreign exchange malpractice.

    According to him, government enforced strict adherence to foreign exchange regulations, stabilising the value of the naira.

    Babarinde noted that the measures that brought sanity to the financial sector in the 1970s had not been sustained.

    “Today, the naira has lost much of its value and forex trading has largely shifted from formal institutions to an unregulated, informal market.

    “One can find foreign exchange dealers, often referred to as “Forex Mallams,” operating openly on the streets, at airports, in markets and outside hotels.

    “This situation not only erodes the integrity of the naira, but also stifles formal forex channels that can enhance regulatory oversight and contribute to economic stability” he said.

    Babarinde also said that Nigeria’s reliance on foreign currencies had entrenched a culture of dollar hoarding among individuals, businesses and even some public officials.

    According to him, when federal allocations are disbursed to states and local governments, substantial amounts of these funds end up being exchanged for dollars or other foreign currencies.

    “Rather than using these resources for development, the funds are hoarded and often kept in hidden compartments in homes or even buried underground.

    “This fuelled a black-market economy and further depreciated the naira’s value.

    “This practice exacerbates poverty, with funds that should be allocated towards infrastructure, healthcare, education and social services remaining unutilised, leaving millions of Nigerians struggling for basic needs.

    “In an attempt to address the currency crisis, President Bola Tinubu, recently signed Executive Order 15 titled “Disclosure, Depositing, Repatriating, and Investment of Eligible Foreign Exchange and Related Matters Order.”

    “With the signed executive order, Nigerians remained sceptical, especially when forex dealers operate openly on the streets without accountability,” he said.

    The APC chieftain said government must demonstrate seriousness in addressing the currency crisis and take concrete steps towards achieving sustainable economic growth.

    Babarinde said that as part of measures to stop illegal forex trading, government should strengthen Forex regulations through digitisation, tackling corruption and ensuring financial integrity.

    Read Also: Naira depreciates by 0.1% against dollar

    He said the government should also expand access to credit facilities, empower SMEs and entrepreneurs, and implement financial literacy programmes.

    “Finance Minister Wale Edun, Central Bank Governor Olayemi Cardoso and other members of the National Economic Council must be transparent and proactive in addressing Nigeria’s Forex crisis.

    “It is crucial for Nigeria’s economic leadership to prioritise sustainable solutions that strengthen the naira and discourage illicit forex activities.

    “Through a collaborative effort that emphasises integrity, digitalisation and economic empowerment, Nigeria can work toward a future where the naira regains its value and becomes a source of pride for its people”, he said.

    (NAN)

  • Naira depreciates by 0.1% against dollar

    Naira depreciates by 0.1% against dollar

    The Naira on Friday slightly further depreciated at the official market trading at N1,652.25 against the dollar.

    Data from the official trading platform of the FMDQ Exchange revealed that the Naira lost N2.05.

    This represents a 0.12 per cent loss compared to the previous trading date, Thursday, when it exchanged at N1,650.20 to a dollar.

    However, the total daily turnover increased to 296.63 million dollars on Friday up from 214.73 million dollars recorded on Thursday.

    At the Investor’s and Exporter’s (I&E) window, the Naira traded between N1,699.00 and N1,620.00 against the dollar.

    (NAN)

  • Rising foreign reserves to support naira stability

    Rising foreign reserves to support naira stability

    • $6b gain pushes reserves to new high • Naira rallies on investors’ confidence

    The naira closed weekend on the upbeat as Nigeria’s foreign exchange (forex) reserves sustained its build-up with addition of $206.16 million to reach $38.88 billion.

    With its seventh consecutive increase at the weekend, Nigeria’s forex reserves have risen by $5.97 billion so far this year and currently standing at its highest level in more than a year. The nation’s forex reserves had ended 2023 at $32.912 billion.

    Market sources said the continuing accretion was due to improved investors’ confidence in the Nigerian market.

    Sources said the increase at the weekend was due partly to purchases from foreign portfolio investors (FPIs), who are currently trading at their highest turnover in five years.

    The naira appreciated by 2.5 per cent to N1,600.78 per dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM). The Central Bank of Nigeria (CBN) had sold $64.0 million to authorised dealers.

    Analysts at Cordros Capital said the outlook for the naira remains stable as diverse forex inflows strengthens apex bank’s capability to maintain a stable market.

    “Barring any shock, we anticipate the naira will remain less volatile in the short term as the CBN maintains intervention in the forex market.

    “This will also be supported by the improved FPI inflows into the forex market due to carry trade opportunities in the capital market,” Cordros Capital stated.

    Latest FPIs report had shown that total turnover of activities by FPIs tripled to its highest in five years as investors continued to show positive disposition to Nigerian investments.

    Total FPIs transactions rose by 194 per cent to N655.47 billion in the first eight months of this year, from N222.78 billion recorded in the comparable period of 2023. This year’s performance is the highest in five years.

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    The report indicated that total inflows so far this year were 34.5 per cent more than the entire total turnover of inflows and outflows recorded in corresponding period of 2023. This underlined the significant increase in investors’ appetite for Nigerian investments.

    Foreign transactions, which were less than one-tenth of total activities at the stock market in the first eight months of 2023, were about one-fifth of total transactions so far this year. This further shows the increasingly positive foreign investors’ attitudes.

    The proportion of foreign investors’ participation in the Nigerian market had slumped to its lowest level in recent years as Nigeria struggled with foreign exchange (forex) crisis, low productivity, insecurity and social crisis.

    A report on total inflows into the NAFEM had indicated an increase of 21.4 per cent to $2.34 billion amid increased inflows from individuals and non-bank institutions.

    The report showed that inflows saw appreciable increases across all segments, with the exception from the inflows from the CBN, which declined during the period.

    The data, obtained from the FMDQ Securities Exchange, indicated that total inflows rose from $1.92 billion in July 2024 to $2.34 billion in August 2024. The increase was driven broadly by stronger inflows from both domestic and foreign sources.

    Inflows from domestic sources grew by 15.5 per cent from $1.68 billion in July 2024 to $1.94 billion in August. Also, inflows from foreign sources jumped by 62.1 per cent to $394.50 million as against $243.30 million in previous month.

    A breakdown showed that inflows from domestic sources were driven by private sources with collections from individuals rising by 162.5 per cent between July and August 2024, while inflows from exporters and non-bank institutions rose by 28.3 per cent and 18.7 per cent respectively. However, inflows from the CBN declined by 53.7 per cent over the period.

    Experts have said the steady build-up in foreign reserves would support naira’s stability in the meantime, providing a breather as government implements fiscal measures to boost the country’s crude oil and diversify the economy.

    Managing Director, AIICO Capital, Dr. Femi Ademola, said increase in foreign inflows and participation implies that foreign portfolio managers are now more optimistic about the country’s economic prospects and are increasingly looking for opportunities to invest in Nigeria.

    He said such stance could send a more reassuring signal to the markets and help to moderate the country’s foreign exchange (forex) position.

    The growing confidence in the economy underlines general expectations that Nigeria’s first domestic foreign-currency denominated bond may record oversubscription amidst strong demand from retail and institutional investors.

    Managing Director, Arthur Steven Asset Management, Mr. Olatunde Amolegbe, said the continuing increase in forex reserves will support government’s current efforts aimed at fostering liquidity and stability at the forex market.

    “The increase is a positive signal for improved liquidity in the forex market. This should ultimately help to stabilize the exchange rate of the naira or even strengthen it against the dollar if the increase is steady and consistent,” Amolegbe said.

    President, Association of Capital Market Academics in Nigeria, Prof Uche Uwaleke, said any increase in forex reserves places the CBN in a stronger position to meet forex obligations as well as intervene in the forex market.

    “If this development is sustained, we are likely to witness an appreciation of the naira in the forex market and more stability in the exchange rate following improved liquidity. This is one positive development capable of keeping away destructive speculators from the forex market,” Uwaleke said.

    In its latest macroeconomic assessment report, the International Monetary Fund (IMF) had sounded upbeat on the Nigeria’s macroeconomic reforms citing the improvement in oil production, ongoing efforts to boost food production and social welfare programmes among others.

    Governor, Central Bank of Nigeria (CBN), Dr Olayemi Cardoso, has outlined that ongoing efforts to strengthen the country’s forex position would lead to increased stability in forex reserves and naira. 

    According to him, the collaboration with Ministry of Finance and the NNPCL to ensure that all forex inflows are returned to the CBN will greatly enhance forex flows and contribute to the accretion of reserves.

    “The expected stability in the foreign exchange market for 2024 can be attributed to the reduction in petroleum product imports and the recent implementation of a market-determined exchange rate policy by the CBN. This reform is designed to streamline and unify multiple exchange rates, fostering transparency and reducing opportunities for arbitrage. The resulting consistent and stable exchange rate will not only boost investor confidence but also attract foreign investment, elevating Nigeria’s appeal to global investors.

    “We are implementing a comprehensive strategy to improve liquidity in our forex markets in the short, medium, and long term. Our focus is on addressing fundamental issues that have hindered the effective operation of our markets over the years,” Cardoso said.

    He pointed out that the apex bank understands that upholding the integrity of financial markets is crucial for building confidence, thus it remains committed to decisively address any infractions and abuses.

    He noted that in efforts to stabilise the exchange rate, the CBN prioritises transparency and a market environment that enables the fair determination of exchange rates, ensuring stability for businesses and individuals alike.

    “We believe that the naira is currently undervalued and, coupled with coordinated measures on the fiscal side, we will expedite genuine price discovery in the near term. This coordinated approach will contribute to a more balanced and stable exchange rate,” Cardoso said.

  • Naira gains 2.24% against dollar at official market

    Naira gains 2.24% against dollar at official market

    The Naira on Friday appreciated at the official market, trading at N1,540.78 to the dollar.

    Data from the official trading platform of the FMDQ Exchange, a platform that oversees the Nigerian Autonomous Foreign Exchange Market (NAFEM), revealed that the Naira gained N35.32.

    This represents a 2.24 per cent gain when compared to the previous trading date on Thursday, Sept. 26, when it exchanged at N1,576.10 to a dollar.

    However, the total daily turnover reduced to 212.31 million dollars on Friday, down from 334.05 million dollars recorded on Thursday.

    Meanwhile, at the Investor’s and Exporter’s (I&E) window, the Naira traded between N1,691 and N1,530 against the dollar.

    (NAN)