The Nation Newspaper

Tag: Naira

  • ‘Naira to rebound over $1.3b forwards settlement’

    ‘Naira to rebound over $1.3b forwards settlement’

    The naira is expected to rebound in the coming months following the settlement of over $1.3 billion foreign exchange (forex) forwards contracts by the Central Bank of Nigeria (CBN) last week, analysts have predicted.

    Analysts at Rand Merchant Bank in Lagos, disclosed that with the settlement, outstanding forex forwards contract left unpaid, between now and December is estimated at $198 million.

    The reduced volume of unsettled forex contract will cut forex pressure against the naira, helping the local currency to rebound.

    The naira yesterday depreciated by 0.06 per cent to close at N1, 476.95 to dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM), the official market.

    Similarly, the naira closed against the dollar in the parallel market N1,490 to dollar, an indication of near convergence between the official and parallel markets.

    The CBN has continued to take certain steps to boost dollar liquidity and support naira recovery at both official and parallel markets.

    In a major push to boost forex availability in the economy, the Central Bank of Nigeria (CBN) recently authorised International Oil Companies (IOCs) operating in Nigeria to sale 50 per cent of bulk forex proceeds at domestic forex market.

    A circular to authorised dealer banks released by CBN director, Trade & Exchange Department, Hassan Mahmud, said earlier directive to the IOCs to send 50 per cent of the forex proceeds to their home countries at once, and the other 50 per cent after 90 days stays.

    However, the balance 50 per cent of the repatriated funds could now be used to settle financial obligations locally, whenever required, during the prescribed 90-day period.

    Read Also: Naira abuse: Court adjourns Cubana Chief Priest hearing to June 25

    The apex bank further directed that all authorised dealers to pay Personal and Business Travel, allowances (PTA/BTA) to their customers through electronic channels only, including debit or credit cards instead of cash.

     “In line with the Bank’s commitment to ensure transparency and stability in the foreign exchange market and avoid foreign exchange malpractices, All Authorized Dealer Banks shall henceforth effect payout of PTA/BTA through electronic channels only, including debit or credit cards. For the avoidance of doubt, payment of PTA/BTA by cash is no longer permitted,” the bank said.

    Importers are finding it increasingly difficult to secure the necessary funds from the official FX market and black market.

    Legitimate needs driving the demand include Form A applications for Business Travel Allowance (BTA), Personal Travel Allowance (PTA), school fees, and medical fees. Small and Medium Enterprises (SMEs) are also grappling with the scarcity, as highlighted by the use of Form Q.

    “The problem is that dollars are scarce in the market. People are not bringing dollars and demand is so high that is why the price is going up,” one street trader disclosed yesterday.

  • Naira rallies on back of rising foreign reserves

    Naira rallies on back of rising foreign reserves

    The naira rallied to a recovery at the weekend on the back of sustained increase in the country’s foreign exchange (forex) reserves.

    The naira appreciated by 1.0 per cent to N1, 482.81 per dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM).

    This came as the nation’s forex reserves rose by additional $73.05 million to $32.74 billion. It was the fifth consecutive accretion in the continuing buildup of the reserves.

    Penultimate week, the reserves had added $195.01 million. It had grown by $89.76 million, $132.68 million and $10.76 million in recent weeks.

    At the forwards market, naira contracts closed on the upside at the weekend with the one-year contract appreciating by 1.1 per cent to $1,504.10 per dollar. The three-month contract recovered by 1.4 per cent to N1,546.65 per dollar while the six-month contract appreciated by 0.6 per cent to N1,621.89 per dollar. However, the one-year contract slipped by 0.1 per cent to N1,769.62 per dollar.

    Finance and economy experts were unanimous that the buildup in external reserves was a good indication for the country’s currency management and macroeconomic stability.

    Analysts expected that changes in forex management rules, steady improvement in crude oil production and upbeat in global oil price could help the country mitigate its volatile forex situation.

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    President, Association of Capital Market Academics in Nigeria, Prof Uche Uwaleke, said any increase 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.

    Uwaleke however said Nigeria needs to curb excessive import dependence to support its forex recovery.

    “It goes without saying that export-based diversification remains the oly sustainable solution to the present forex crisis,” Uwaleke said.

    According to him, to curb the demand pressure, government should compel a change in consumption behaviour by enacting a ‘Buy Nigeria law’ akin to the ‘Buy America Act’ of 1933 and recently the ‘Build America, Buy America Act’ of 2021.

    “Also, Nigeria’s import data support revisiting and scaling up the CBN’s currency swap deal with the Peoples Bank of China. Given that the bulk of Nigeria’s imports are from China, it stands to reason, therefore, to explore ways of bypassing the dollars and settling these transactions in the Yuan. This was the idea behind the currency swap with China which was largely inadequate in size. In order to increase the stock of Yuan in our external reserves, Nigeria can issue panda bonds, which are bonds denominated in the Chinese Yuan and are considered cheaper than Eurobonds,” Uwaleke said.

    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.

    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 depreciates to N1,486 per dollar at official window

    Naira depreciates to N1,486 per dollar at official window

    The naira yesterday depreciated by by 1.58 per cent to close at N1, 485.66 to dollar at the the Nigerian Autonomous Foreign Exchange Market (NAFEM).

    The local currency opened the week at N1,468 per dollar on Monday, stronger than  previous  exchange rate of  N1,497 per dollar on Friday, May 17, 2024.

    The intra-day high and low recorded during the day were N1,550 per dollar and N1,400 per dollar respectively, representing a lean spread of N150  per dollar.

    Similarly, the naira closed against the dollar at the parallel section of the market, to trade at N1,505/$1.

    The CBN recently directed that all authorized dealers to pay Personal and Business Travel, allowances (PTA/BTA) to their customers through electronic channels only, including debit or credit cards instead of cash.

    Read Also: TUC decries naira weakness over high cost of living

    “In line with the Bank’s commitment to ensure transparency and stability in the foreign exchange market and avoid foreign exchange malpractices, All Authorized Dealer Banks shall henceforth effect payout of PTA/BTA through electronic channels only, including debit or credit cards. For the avoidance of doubt, payment of PTA/BTA by cash is no longer permitted,” the bank said.

    Importers are finding it increasingly difficult to secure the necessary funds from the official FX market and black market.

    Legitimate needs driving the demand include Form A applications for Business Travel Allowance (BTA), Personal Travel Allowance (PTA), school fees, and medical fees. Small and Medium Enterprises (SMEs) are also grappling with the scarcity, as highlighted by the use of Form Q.

  • Naira gains N3.31 against dollar at official market

    Naira gains N3.31 against dollar at official market

    The Naira gained N3.31 at the official market on Tuesday, trading at N1,465.68 to the dollar.

    Data from the FMDQ Exchange, which oversees the Nigerian Autonomous Foreign Exchange Market (NAFEM), revealed a 0.22 percent appreciation for the Naira compared to Monday’s rate of N1,468.99 to the dollar.

    The volume of currency traded also increased, with the total daily turnover rising to 268.17 million dollars on Tuesday from 161.41 million dollars on Monday.

    At the Investor’s and Exporter’s (I&E) window, the Naira traded between N1,549.00 and N1,401.00 against the dollar.

    The Association of Bureau De Change Operators of Nigeria (ABCON) commended the CBN’s reforms for the Naira’s appreciation at the official market.

    Read Also: That Naira may breathe

    ABCON President, Dr Aminu Gwadabe, urged the CBN to sustain policies benefiting the local currency.

    Gwadabe cited multifaceted efforts through fiscal and monetary policies, alongside security agency interventions, as key to the Naira’s recovery.

    “Volatility is like runoff water; if not directed, it will direct itself. I am happy to see multiple agencies coming together to confront these challenges,” he said.

    Gwadabe called for technological upgrades and collaboration among operators, regulators, the government, and security agencies.

    This, he noted, was to improve control over the foreign exchange market and to establish a bylaw to mitigate volatility.

    (NAN)

  • That Naira may breathe

    That Naira may breathe

    • CBN is trying but its efforts should be complemented by other economic players

    Alongside the removal of fuel subsidy at the inception of the President Bola Tinubu administration in May, last year, and the merger of the divergent, parallel foreign exchange markets were obviously inevitable economic reforms that have had considerable negative impacts such as escalation of prices of essential goods and services as well as the consequent fall in the standard of living for the majority of Nigerians. The fusion of the extant fraud-laden twin foreign exchange markets resulted in the immediate gross devaluation of the Naira, with the local currency exchanging at N1,900 to the dollar at some point, with fears that it could even plunge as low as over N2,000 to the dollar.

    Thanks, however, to proactive measures of the Central Bank of Nigeria (CBN) and major reforms, both in the operations of the apex bank and key stakeholders in the money market such as the bureaux de change entities, the Naira has gathered some strength and now fluctuates between N1,400 and N1,480.

    Yet, experts believe that the volatility being witnessed in the country’s foreign exchange market and the successive incidence of sharp falls in the value of the Naira are more a function of the activities of reckless speculators seeking to make a kill from currency trading, than being a function of the natural interplay of the forces of demand and supply.

    The CBN and other key managers of the economy certainly deserve commendation for staying the course in devising and enforcing proactive policies to rein in reckless speculations in the foreign exchange market as well as boost availability of the dollar relative to the Naira so as to enable the local currency to breathe.

    One of the latest measures of the CBN in this regard is its decision to allow International Oil Companies (IOC’s) operating in Nigeria to inject up to 50% of their oil and gas export proceeds in the Nigerian market through direct sales and settlement of assorted domestic financial obligations.

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    Before now, the apex bank had allowed the IOCs to repatriate 50% of their oil and gas proceeds to their home countries at once and the other 50% after 90 days. An earlier circular from the CBN had directed authorised dealer banks to allow IOCs to repatriate such funds in batches, to minimise negative effects on the foreign exchange market. The bank has stated that its new policy stance on the repatriation of oil and gas proceeds was largely informed by its observation that proceeds from oil exports by IOCs working in Nigeria are transferred offshore for the benefit of parent accounts of the affected companies, with adverse effects on liquidity in Nigeria’s foreign exchange market.

    The CBN explained that “In line with the ongoing reforms in the foreign exchange market, it has become necessary to take measures to address this trend. Consequently, the CBN hereby directs banks to allow pool cash on behalf of the IOCs, subject to a maximum of 50% of the repatriated export proceeds in the first instance. Then, the balance of 50% may be repatriated after 90 days from the date of the inflow of the export proceeds”.

    Some of the eligible items that the IOCs can spend at least 50% of oil proceeds on within the Nigerian economy include royalty, domestic contractor invoices, settlement of Petroleum Profit Tax, cash call as well as domestic loan principal and interest payment. Also included in this category are transactions charges such as Nigerian Content Development Levy, education tax, etc.

    It is reassuring that the CBN has restated its commitment to ensuring that the IOCs have easy access to their export proceeds to meet their offshore obligations. Indeed, the smooth and seamless repatriation of their profits from the country has been a highpoint of President Tinubu’s discussions with potential foreign investors since assumption of office. But the critical point is that the existence of a virile and vigorous Nigerian economy characterised by a reasonably stable and strong national currency is necessary for both the IOCs and domestic actors in the economy. There must thus be continuous balance and interplay between the idealism of free market dynamics and the pragmatism of some degree of regulatory intervention to stabilise and protect the local currency.

  • Naira delisted from P2P crypto platforms to combat currency manipulation

    Naira delisted from P2P crypto platforms to combat currency manipulation

    Following directives from the Office of the National Security Adviser (ONSA) and the Securities and Exchange Commission (SEC), Cryptocurrency exchanges have begun delisting the naira as a trading option.

    A statement from the SEC in Abuja on Thursday, May 16, disclosed that KuCoin, a major Cryptocurrency exchange, has confirmed the removal of the naira as a fiat currency option for transactions. 

    The platform is currently “making the necessary adjustments to its technology to accommodate the delisting of the Naira as soon as practicable.” 

    This move by KuCoin reflects the broader government effort to address concerns about the impact of Peer to Peer (P2P) crypto trading on the value of the naira.

    The delisting of the naira is intended to limit the ability to “manipulate the exchange rates against the Nigerian currency the Naira.” 

    Read Also: Naira gains N61.38 against dollar at official market

    Officials believe that P2P platforms have been used for speculative activities that have contributed to the naira’s depreciation. 

    By removing the naira as a trading option, the government hopes to “further strengthen the value of the naira.”

    The ONSA previously issued directives calling for the delisting of the naira from crypto platforms. 

    The SEC, the government’s capital markets regulator, has also taken a proactive stance. 

    During a meeting with the Blockchain Industry Coordinating Committee of Nigeria (BICCoN), the SEC outlined its plans to delist the naira from P2P trading to “avoid the level of manipulation that is currently happening.”

    Dr. Emomotimi Agama, Acting Director General of the SEC, expressed satisfaction with the “compliance with the Directives by the NSA” demonstrated by Cryptocurrency exchanges like KuCoin. 

    He emphasised the importance of “protecting what belongs to us” and warned those engaged in “sharp practices that undermine national interest” to “cease and desist.” 

    Dr. Agama reiterated the SEC’s commitment to working with the ONSA, the Economic and Financial Crimes Commission (EFCC), and other relevant agencies to “ensure that illegality is not allowed to thrive.”

    The delisting of the naira from P2P platforms represents a significant development in the Nigerian Cryptocurrency landscape. 

    While the government aims to achieve greater stability in the foreign exchange market, the long-term impact of this policy remains to be seen. 

    The effectiveness of the delisting in curbing manipulation and the potential consequences for the Cryptocurrency industry in Nigeria are issues that will be closely monitored in the coming months.

  • Naira gains N61.38 against dollar at official market

    Naira gains N61.38 against dollar at official market

    The Naira on Wednesday appreciated at the official market, trading at N1,459.02 to the dollar.

    Data from the official trading platform of the FMDQ Exchange, revealed that the Naira gained N61.38.

    This represents a 4.04 per cent gain when compared to the previous trading date on Tuesday, when the local currency exchanged at N1,520.40 to a dollar.

    Also, the total daily turnover increased to 289.14 million dollars on Wednesday up from 128.76 million dollars recorded on Tuesday.

    Read Also: Emefiele pleads not guilty to alleged unlawful printing of new naira notes

    Meanwhile, at the Investor’s and Exporter’s (I&E) window, the Naira traded between N1,593 and N1,401 against the dollar.

    (NAN)

  • Naira slides by 4.6% against dollar at official market

    Naira slides by 4.6% against dollar at official market

    The Naira on Tuesday depreciated at the official market, trading at N1,416.57 to the dollar.

    Data from the official trading platform of the FMDQ Exchange, a platform that oversees the Nigerian Autonomous Foreign Exchange Market (NAFEM), showed that the Naira lost N62.36.

    This represents a 4.60 per cent loss when compared to the previous trading date on Monday when it exchanged at N1,354.21 to a dollar.

    However, the total daily turnover increased to 160.77 on Tuesday, up from 84.83 million dollars recorded on Monday.

    Read Also: Naira appreciates further, gains by 3.3%

    Meanwhile, at the Investor’s and Exporter’s (I&E) window, the Naira traded between N1,445 and N1,301 against the dollar.

    (NAN)

  • Naira appreciates further, gains by 3.3%

    Naira appreciates further, gains by 3.3%

    The Naira on Monday further appreciated at the official market, trading at N1,354.21 to the dollar.

    Data from the official trading platform of the FMDQ Exchange, a platform that oversees the Nigerian Autonomous Foreign Exchange Market (NAFEM), showed that the Naira gained N46.19.

    This represents a 3.29 per cent gain when compared to the previous trading date on Friday, May 3, when it exchanged at N1,400.40 to a dollar.

    Read Also: Naira rebounds, gains N28.15 against dollar

    However, the total daily turnover reduced to 84.83 million dollars on Monday, down from 201.88 million dollars recorded on Friday.

    Meanwhile, at the Investor’s and Exporter’s (I&E) window, the Naira traded between N1,441.00 and N1,285.00 against the dollar.

    (NAN)

  • Naira rallies 3.30% gain to N1,354 per dollar

    Naira rallies 3.30% gain to N1,354 per dollar

    The naira yesterday recorded major gain of 3.30 per cent to close at N1,354 to dollar at the Nigerian Autonomous Foreign Exchange Market Window (NAFEM) window.

    The naira had closed last week at N1,400 to dollar at the NAFEM window on Friday before Monday’s gain.

    The Central Bank of Nigeria on last month disclosed that it sold $10,000 to each Bureau De Change operator at a rate of N1,021 per US dollar.

    This is the second time last month that the apex bank sold US dollars to the BDCs. The bank, on 8 April, sold $10,000 to each BDC operator at a rate of N1,101 per US dollar.

    In the circular, signed by the CBN’s Director of the Trade and Exchange Department, Hassan Mahmud, the bank also instructed each BDC to sell the dollars to eligible customers at a rate not exceeding 1.5 per cent above the purchase price.

     Also, the CBN recently directed that all authorized dealers to pay Personal and Business Travel, allowances (PTA/BTA) to their customers through electronic channels only, including debit or credit cards instead of cash.

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     “In line with the Bank’s commitment to ensure transparency and stability in the foreign exchange market and avoid foreign exchange malpractices, All Authorized Dealer Banks shall henceforth effect payout of PTA/BTA through electronic channels only, including debit or credit cards. For the avoidance of doubt, payment of PTA/BTA by cash is no longer permitted,” the bank said.

    Importers are finding it increasingly difficult to secure the necessary funds from the official FX market and black market.

    Legitimate needs driving the demand include Form A applications for Business Travel Allowance (BTA), Personal Travel Allowance (PTA), school fees, and medical fees. Small and Medium Enterprises (SMEs) are also grappling with the scarcity, as highlighted by the use of Form Q.

    “The problem is that dollars are scarce in the market. People are not bringing dollars and demand is so high that is why the price is going up,” a street trader told Business Day on Tuesday morning.

    Former Executive Director, Keystone Bank Limited, Richard Obire advised that Nigeria’s heavy and skewed outward-oriented consumption of goods and services as seen in decades of long substantial bills for food and energy imports should be reversed to save the naira.

    Also, the massive corruption-driven capital outflows which in turn severely damages Nigeria’s capacity to produce at scale that will enable the country to fully engage its large population to create widespread prosperity works against the naira.