The Nation Newspaper

Tag: reserves

  • Foreign reserves to hit $41b

    Foreign exchange reserve,which stood at $39.57 billion on September 10, is expected to hit $41 billion by the end of this month, Managing Director, Financial Derivatives Company (FDC) Limited, Bismarck Rewane, has said.

    At the FDC Breakfast Meeting at the Lagos Business School, he said the slow replenishment of the reserves would continue until they reach $41 billion by month-end.

    Analyses of the reserves based on data from the Central Bank of Nigeria showed that the reserves have risen by over $2.4 billion in the last 10 weeks. The reserves which were at $37.2 billion on June 24 rose to $3.84 billion on July 17.

    Rewane said average oil prices of Nigerian crude remained above $104 per barrel while the positive impact on oil revenue will be felt in October. The United States own to less than two per cent, of exports, compared to seven per cent in 2011.

    Dwindling Nigerian shipments to the U.S. imply that disruptions to Nigeria’s oil supplies are unlikely to trigger oil price rallies. Nigeria imports about 50 per cent of its refined products from the US.

    He said oil revenues forecast in second quarter is $12 billion as against first quarter revenue of approximately $11 billion adding that accruals from oil form major part of the reserves. The reserves will cover 8.2 months of import cover

    Analysing financial sector credit, he said the average opening credit position of the banking system was N358.75 billion in July, about 0.66 per cent lower than June figure. Inflation crept up by 0.2 per cent to 8.2 per cent, the fourth consecutive monthly increase.

    He said the Monetary Policy Committee (MPC) left the monetary policy instruments and stance unchanged in July even as the naira appreciated at the interbank market to N161.85/ dollar but depreciated at the parallel market to N168/ dollar.

    Also, banking earnings were flat and lower than first quarter because of the cumulative impact of the Cash Reserve Ratio (CRR) hike. Also, average corporate earnings for lenders declined by 1.53 per cent in second quarter and stock prices decreased by 3.16 per cent.

     

  • Foreign exchange reserves cross $38b mark

    Foreign exchange reserves cross $38b mark

    Foreign exchange reserves have gone up $1.1 billion in 19 days. The reserves rose marginally to $37.26 billion on June 26 and were at $37 billion on June 20, according to Central Bank of Nigeria (CBN) figures.

    Before the upbeat, the reserves had maintained a steady decline  after closing last year at $42.85 billion. The year-end figure represented a decrease of $0.98 billion or 2.23 per cent against  $43.83 billion at end- December 2012. The reserves dropped to $38.79 billion as at March 12.

    Analysts said the reserves declined as imports of fuel and foods soared.

    But the CBN said the decrease  was driven largely by the increased funding of the foreign exchange market in the face of intense pressure on the naira and the need to maintain stability. The CBN said the pressure on external reserves was deemed to be consistent with the seasonal annual payment of dividends to foreign investors.

  • Forget grazing reserves, Oritsejafor tells herdsmen

    Christian Association of Nigeria (CAN) President Pastor Ayo Oritsejafor has advised those clamouring for grazing reserves to embrace modern ranches.

    Oritsejafor said 80 per cent of the people killed by Boko Haram members were Christians.

    In his keynote address at CAN’s National Executive Committee (NEC) meeting in Makurdi, the Benue State capital, the CAN President said: “The sect is advocating a jihad in Nigeria.

    “Cattle rearers, especially Fulani herdsmen, should embrace modern ranches, which would be created with facilities for meat processing.

    “After the meat is processed, cooling vans would transport them through out the country as it is done in Europe.

    “The ranches should be located in the North, where the herdsmen are based.  Just like petrol is refined and distributed all over the country.”

    Oritsejafor said Boko Haram has a hidden agenda as what they want is not what Nigerians want; he called on the security agencies to tackle the security challenges.

    “Who gave them AK 47 rifles? Who trained them on how to handle weapons?

    “ I wonder why they have not been arrested and prosecuted

    “I have received several threat text messages from the sect but I am not bothered because I will continue to speak the truth.”

  • Foreign exchange reserves fall by $200m to $37.9b

    Foreign exchange reserves fall by $200m to $37.9b

    The foreign exchange reserves, which stood at $42.85 billion last December dropped to $37.9 billion on May 5, data from the Central Bank of Nigeria (CBN) has shown.

    The decline has been gradual but steady except for occasional gains.

    The reserves stood at $42.77 billion on February 3, and dropped to $39.72 billion on March 3. It further dropped to $37.8 billion in March 28. Analysts said the reserves declined as imports of fuel and foods soared.

    The CBN noted that the decrease in the reserves resulted largely from a slowdown in portfolio and foreign direct investment (FDI) flows in fourth quarter of last year, resulting in increased funding of the foreign exchange market by the CBN to stabilise the naira. CBN also said the pressure on external reserves was deemed to be consistent with the seasonal annual payment of dividends to foreign investors.

    The regulator expressed concern over the continued depletion of the Excess Crude Account (ECA) which balance stood at less than $2.5 billion, compared with about $11.5 billion in December 2012.

    “This absence of fiscal buffers increased our reliance on portfolio flows thus, constituting the principal risk to exchange rate stability, especially with uncertainties around capital flows and oil price,” the CBN said.

    Oil prices remained relatively high while production was improving, and there were signs of accretion to external reserves. The CBN also expressed concern over the sudden surge in domiciliary account balances which may offset the gains from imposing 75 per cent CRR on public sector funds.

    Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, said of the $37.87 billion reserves as at April 3, $10 billion was in hot money.

    Hot money is the flow of funds (or capital) from one country to another in order to earn a short-term profit on interest rate differences and/or anticipated exchange rate shifts.

    He said reversal of capital flows will intensify, further depleting external reserves.

    These speculative capital flows are called “hot money” because they can move very quickly in and out of markets, potentially leading to market instability.

    Rewane said there would be further external sector imbalances in the run-up to 2015 elections even as equity market imbalance is likely to increase with stock market correction continuing.

  • Foreign exchange reserves record ‘marginal increase’ to $38b

    Foreign exchange reserves record ‘marginal increase’ to $38b

    The foreign exchange reserves last Tuesday, rose slightly to $38 billion, about $200 million higher than the $37.8 billion position it was in April 14, data obtained from the Central Bank of Nigeria (CBN) yesterday showed.

    The reserves had maintained steady decline in recent months after closing last year at $42.85 billion. The year-end figure represented a decrease of $0.98 billion or 2.23 per cent compared with $43.83 billion at end- December 2012. It further dipped to $38.79 billion as at March 12. The reserves were at $42.77 billion on February 3, and dropped to $39.72 billion on March 3. Analysts said the reserves declined as imports of fuel and foods soared.

    But the CBN said the decrease in the reserves level was driven largely by the increased funding of the foreign exchange market in the face of intense pressure on the naira and the need to maintain stability.

    The CBN said the pressure on external reserves was deemed to be consistent with the seasonal annual payment of dividends to foreign investors.

    Oil prices remained relatively high while production was improving, and there were signs of accretion to external reserves. The CBN also expressed concern over the sudden surge in domiciliary account balances which may offset the gains from imposing 75 per cent Cash Reserve Ratio (CRR) on public sector funds.

    It expressed concern over the continued depletion of the Excess Crude Account (ECA) which balance stood at less than $2.5 billion on January 17, 2014 compared with about $11.5 billion in December 2012.

    According to the CBN, the absence of fiscal buffers increased its reliance on portfolio flows thus, constituting the principal risk to exchange rate stability, especially with uncertainties around capital flows and oil price.

    On the depletion of fiscal buffers, the regulator decried the continuous fall in revenue from oil despite stable price of oil and production last year.

    The apex bank said accretion to external reserves remained low while much of the previous savings have been depleted, thereby undermining the ability to sustain exchange rate stability. The Committee therefore, urged the fiscal authorities to block revenue leakages and rebuild fiscal savings needed to sustain confidence and preserve the value of the naira.

    It said the reduction of the United States stimulus especially, could in addition, trigger capital flow reversals and put greater pressure on the naira exchange rate.

  • Foreign reserves rise by $50m in two days

    Nigeria’s foreign exchange reserves which have been on decline for the past two months reversed the trend with $47 million increase on Monday and Tuesday. The reserves were at $37.80 billion on March 31 but rose to $37.83 on April 1 and further increased to $37.85 on April 2.

    The reserves had received serious battering after the suspension of the Governor of the Central Bank of Nigeria (CBN) Sanusi Lamido Sanusi on February 20 as foreign investors scurried for exit.

    The reserves were at $42.77 billion on February 3, and dropped to $39.72 billion on March 3, losing $3 billion in one month. Analysts said the reserves declined as imports of petroleum and foods soared.

    The level of Nigeria’s external reserves had fallen to $43.63 billion as at December 30th last year. This is the lowest level since November, 2012 and a decline of 10.7 per cent from 2013’s Year to Date peak of $48.86 billion.

    The continuous use of the external buffers to support the value of the naira and declining oil receipts are among the contributing factors to the depletion.

    With over 50 per cent of foreign exchange utilised for the importation of fuel and food, the CBN said policy should focus on a comprehensive backward integration production strategy, while fast-tracking the repair of existing refineries.

    As at October 10, the reserves were at $45.3 billion, as against $46 billion in September 19, and $47 billion in August 19, data from the CBN website showed.

    Further findings showed that reserves were at $47.7 billion on July 1, and dropped to $47 billion on July 15. Reserves also entered August 1 at $47 billion. The foreign currency reserves had five years ago, in August 2008, peaked at $68 billion before the global financial crises impacted negatively on it.

  • ‘Declining external reserves, tight liquidity’ll moderate equities’ returns’

    As Nigerian stock market moves to close the first quarter on the negative, leading investment banker and Managing Director, Cowry Asset Management Limited, Mr. Jonson Chukwu has said the Nigerian market would remain susceptible to the downtrend given the macroeconomic and monetary conditions.

    He said the continuing decline in Nigeria’s foreign reserves, the continuous monetary tightening view of the Central Bank of Nigeria (CBN), high cost of funds and the intense political environment would impact negatively on the performance of the equities’ market.

    In a lecture a lecture titled: ‘Investment instruments in Nigerian capital market: Risks and benefits’ delivered at a forum organised by Capital Market Correspondents Association of Nigeria (CAMCAN) in Lagos, Chukwu said the market’s outlook has been cautious because of the macroeconomic, monetary and political conditions.

    According to him, the stock market, which currently has a negative year-to-date return of 7.6 per cent, is facing both internal and external constraints especially with the beginning of the United States (US) tapering.

    He pointed out that external reserves remains a cardinal barometer for assessing the financial risk of an economy and it is a major gauge for foreign portfolio investors in either the equities sector or in the debt instruments.

    “The Nigerian external reserves currently stands at $38.07 billion from a high of $48.86 billion on the 2nd of May 2013. This represents a $10.79 billion or 22 per cent decline in 11 months. Some of the responsible factors include continued Naira defence, lackluster crude oil prices, decline in crude oil production and panic withdrawals by foreign portfolio investors,” Chukwu said.

    He noted that the CBN’s increase in deposit money banks’ Cash Reserve Requirement (CRR) on public funds has obviously curtailed banks’ investment potentials and ultimately their earnings capacity adding that the increase has triggered a cautious outlook on the banks’ equities.

    According to him, with leaner cash for lending, banks’ lending rates remains high at about 26 per cent which was a disincentive to real sector borrowing while non-bank companies have continued to face challenges as business activities are scuttled by non availability of funds.

    He noted that election fever has also increased uncertainty on equity investment.

    “The Nigerian political terrain has been intertwined with high powered rancor particularly between ruling People Democratic Party and the All Progressive Congress. The need for fund for political campaigns and the fear of post election crises mount a divestment pressure on some investors,” Chukwu said.

    He however noted that the Nigerian capital market remains attractive as one of the most robust emerging markets.

    “The Nigerian capital market as one of the emerging and frontier markets presents a lot of investment opportunities for discerning investors,” Chukwu said.

  • Court reserves judgment in NBA suit

    Court reserves judgment in NBA suit

    Justice Shagbor Ikyegh of the Court of Appeal, sitting in Lagos, has reserved judgment in an appeal filed by the Nigeria Bar Association (NBA), challenging a Federal High Court ruling restraining the NBA from collecting practising fee.

    NBA’s National Executive Committee (NEC), last year, announced new practising fees, beginning from 2013. The increment, which was said to be about 250 per cent, is causing ripples in the association.

    Aggrieved lawyers sued the association before Justice Rita Ofili-Ajumogobia of a Federal High Court, Lagos.

    In a preliminary ruling, Justice Ofili-Ajumogobia restrained the NBA from collecting the new fees, pending the determination of a suit by Seth Amaefule, Amaka Aneke, Celestine Nwankwo, Charles Ola-Oni and Tayo Arojo.

    Through their lawyer, Pa Tunji Gomez, the plaintiffs sought an order compelling the defendants to collect the old fees on January 1, 2012.

    The plaintiffs challenged the upward review, arguing that the review had made those with less than five years at the Bar to pay N10,000, instead of the previous N2,000.

    Gomez urged the court to grant their prayer and restrain NBA from collecting or enforcing the new fee regime.

    He prayed the court to stop the defendants from sending messages to lawyers to pay the new fees, until the case was determined.

    The defendants are: NBA President Okey Wali (SAN); General Council of the Bar; Attorney-General of the Federation, Mohammed Adoke; former NBA Lagos branch Chairman Taiwo Taiwo, among others.

    NBA, through its lawyer, Tayo Oyetibo (SAN), appealed the decision, describing the matter as a pervertion of justice.

    Adopting the appellants’ brief, dated November 20, 2013, Oyetibo argued that there was no basis for the injunction restraining the association. He averred that the plaintiffs lacked the locus standi to institute the suit.

    The lawyer argued that the lower court erred in law and came to a perverse decision when it granted the injunction.

    He argued that the lower court erred in law when it assumed jurisdiction.

    Besides, Oyetibo submitted that the lower court misdirected itself and came to a perverse decision when it applied the wrong principle in determining the mandatory motion for injunction.

    The lawyer urged the court to allow the appeal and set aside the ruling.

    Gomez, however, asked the appellate court to dismiss the appeal with costs,

    He stressed that majority of lawyers could not afford the new fees.

    The lawyer submitted that some lawyers were so impoverished that they rode commercial motorcycles (Okada) to courts.

    He argued that the NBA did not follow the proper guideline before imposing a new practising fee on legal practitioners.

    After listening to parties, the court reserved judgement for a date to be communicated to the parties.

  • Foreign reserves slump to $44b

    Nigeria’s foreign exchange reserves have declined to $44.1 billion as at December 17, losing $700 million in one month. The reserves, which stood at $44.8 million in November 18, maintained steady fall in the last three months. The reserves were at $44.6 billion as at November 27, contrary to $45 billion recorded in October 14.

    Data obtained from the Central Bank of Nigeria (CBN) website showed that at $45.2 billion, the reserves had increased by $200 million from October 14 to 28, before dipping further.

    The reserves were also at $45.2 billion on November 1 before they kept dropping on daily basis till November 27.

    Other figures showed that the reserves were at $47.7 billion on July 1, and dropped to $47 billion on July 15, entering August 1 at $47 billion. The foreign currency reserves had, fives year ago, specifically in August, peaked at $68 billion before the global financial crises impacted negatively on it.

    Chief Operating Officer, Citi Bank Nigeria, Akin Dawodu said the reserves are assets held by the CBN and monetary authorities, mostly in dollar to back their liabilities, such as the naira.

    He explained that manipulating reserves levels can enable CBN intervene against volatile fluctuations in currency by affecting the exchange rate and increasing the demand for the naira. “Reserves act as shock absorber against factors that can negatively affect a country’s exchange rates and, therefore the CBN uses the reserves to maintain a steady rate,” he explained during training for financial journalists in Lagos.

    Analysis of foreign exchange utilised by sectors revealed that $7.83 billion was expended on the importation of visible goods into the country in the second quarter as against $6.63 billion and $7.74 billion in first quarter and second quarter of 2012, respectively.

  • Foreign exchange reserves drop to $45b

    The foreign reserves have declined to $45 billion as at October 11, data from the Central Bank of Nigeria (CBN) website has shown. Analysts have projected a further fall of the reserves to $44 billion by year-end. The reserves were at $45.4 billion as at September 30, as against $46.8 billion on August 30, reflecting a loss of $1.4 billion in 30 days, before declining to current level.

    The CBN data showed that the reserves were on a steady and continuous decline throughout September.

    The reserves were at $46.82 billion on September 2, 446.81 billion on September 3 and $46.77 billion on September 9. The decline continued on September 19, when they stood at $46 billion before dropping to $45.9 billion on September 20.

    The reserves stood at $47 billion on August 19, dropped to $46.9 billion on August 21. The reserves were at $47.7 billion on July 1, and dropped to $47 billion on July 15.

    They stood at $48.33 billion on June 24, declined to $48.15 billion on June 27 and closed the month at $48 billion. The CBN data showed that the reserves were at $43.83 billion at end of December, 2012 as against $68 billion in August 2008 before the global financial crises impacted negatively on them.

    The CBN had consistently maintained that inflow into the reserves was not consistent with the oil prices and, this underscores the need for tighter fiscal controls around oil revenues.

    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 even without excessive reliance on monetary tightening measures.