The Nation Newspaper

Tag: reserves

  • Experts laud keeping of reserves in Chinese Yuan

    Nigeria’s decision to put 10 per cent of its $47 billion reserves in Chinese Yuan has been described as wise and strategic by global investment experts. Other currencies in the basket are Euro, Pounds and Riyal.

    Speaking at a trade and investment in global market forum in Lagos, Amro Zakaria, Managing Director, Market Trader Academy (MTA) in Dubai, United Arab Emirates, said China is one of the biggest trading partners of Nigeria and such diversification would protect the naira from currency war going on between Japan, Europe and America. Japan’s plan to devalue its currency to give its economy a boost is being opposed by Europe and America.

    Zakaria said aside reserves diversification, Nigeria should also diversify the economy away from oil, having discovered that its biggest buyer, the United States will achieve energy independence by 2020.

    He said though the country may identify new buyers of its crude oil, the most dependable and trusted buyer, the United States, may not be there anymore.

    He said Nigeria’s best resource remains its youths, adding that with proper education, the country’s development will no longer be dependent on oil.

    The expert said the company is committed to educating the youth on how the global market works. Besides, he said there is need to carry the campaign to schools and higher institutions. He said it is also imperative for the youth to tap into the global market and explore opportunities there. This, he said, can only be possible if there is improvement in education and communication among the youths.

    The expert explained that learning about global markets and economic trends through education will afford Nigerians the opportunity to diversify their investment portfolios and to compete effectively in an ever globalised world.

    Describing Nigeria as an emerging market with lots of potentials, he advised that trading and investments in global equities, precious metals, forex, etc will further empower the people and improve their chances in mitigating adverse effects caused by current and future global events.

    Chief Business Development Officer, World Wide Markets Limited (WWM), in the United States, Steven Santamouris, who spoke on Learn to trade and invest in global markets, described World Wide Markets as one of the leading brokerage firms offering access to global markets including “exchange traded US equities.”

    Santamouris said clients should be armed with a true and detailed understanding of how the FX Brokerage business operates from the inside out.

    He described WWM partnership with the Market Trader Academy as strategic, saying it would provide the Academy with the necessary technical expertise for traders to navigate the volatility of the markets through knowledge of those markets as well as risk management strategies.

     

  • Reserves may hit $60b on rising oil output

    Reserves may hit $60b on rising oil output

    • Naira records best week

    FOREIGN reserves, which stood at $36.39 billion on August 7, last year, is expected to hit $60 billion as oil production soars.

    Crude oil production spiked to an all-time high of 2.7 million barrel per day (mbpd) on July 25, 2012, the first time in 50 years. This peak represented an increase of 28.57 per cent from the year-to-date average of 2.11 mbpd.

    In the Financial Derivatives Company (FDC) Economic Report for August, its Managing Director, Bismark Rewane, said at an average production level of 2.7 million barrels production per day (mbpd), there will be 10.7 per cent increase in government revenue to N946.97 billion.

    He estimated a 9.12 per cent rise in forex inflows to $4.02 billion, and reserves accretion to $60 billion, covering over 10 months of import cover, adding that the Central Bank of Nigeria (CBN) may allow the naira to appreciate sharply to N145 to a dollar, to compensate for the substantial increase in oil revenue.

    “The combined effect of the relative peace in the Niger Delta region, and the likely passage of the Petroleum Industry Bill (PIB), would result in an increase in oil production above the current trend of 2.1mbpd on average, in the short run,” he said.

    In another development, the naira strengthened a fourth day last Friday to complete its best one-week performance since August after oil companies sold dollars to meet local expenses.

    The currency rose 0.1 per cent to N157.45 per dollar according to data compiled by Bloomberg. It gained 0.7 per cent last week, it’s best performance since the five days through August 17.

    Oil companies, including the Nigerian National Petroleum Corporation (NNPC), are the second-biggest source of dollars after the Central Bank of Nigeria, which offers foreign currency at auctions on Mondays and Wednesdays to maintain exchange-rate stability.

    “The naira strengthened on the back of foreign-exchange sales from oil companies last week, expected dollar sales from the NNPC and to a lesser extent, some modest foreign-capital inflows,” Samir Gadio, an emerging-markets strategist at Standard Bank Group Limited. in London, said in an e- mail. “It is likely that dollar-naira will drift higher once the NNPC effect dissipates this week.”

    The apex bank sold $237 million at an April three auction, compared with $300 million at the previous sale on March 27. It didn’t hold an offer on April one, because of a public holiday.

    Borrowing costs on Nigeria’s local-currency debt due January, 2022, rose six basis points, or 0.06 percentage point, to 10.89 per cent, according to last week’s prices compiled by the Financial Markets Dealers Association.

    Yields on Nigeria’s $500 million of Eurobonds due January 2021 declined three basis points to 4.33 percent today

     

     

  • ‘Reserves accretion hits $1.4b in Feb’

    The foreign exchange reserves added $1.4 billion last month, raising the figure to $47.4 billion, FBN Capital, an investment and research firm, has said.

    In an emailed report, the firm said the reserves have grown in each of the seven past months other than December. It said reserves added $10.9 billion since the end of July when the Monetary Policy Committee (MPC) raised cash reserve requirement for banks by 400 basis points.

    FBN Capital said the Central Bank of Nigeria’s (CBN’s) sales of forex in the Wholesale Dutch Auction System (WDAS) amounted to $1.15 billion in February, compared with $830 million the previous month. The rise, it said, could be traced to the softening of offshore inflows to the interbank market in buying naira-denominated Federal Government of Nigeria (FGN) debt.

    It said an easing of that demand would oblige the CBN to increase its offer at auction.

    The reserves include the balance in the excess crude account, for which the latest available figure was $9 billion.

    “We would expect the distributions from the account to the tiers of government to pick up as the FGN strives to reach an agreement with the state governors on the full functioning of the sovereign wealth fund. Draw downs in the run-up to the elections in 2015 would also not be surprising,” it said.

    The firm said reserves at end of last month provided cover for more than nine months’ imports of goods, and over six months when services are included. The level of reserves is now the highest since January 2009, and rests on appropriate monetary policy and the comfort of a high oil price.

  • Foreign reserves hit $46.9b

    Nigeria’s foreign reserves soared to $46.91 billion on February 20, adding $900 million from the figure, in two weeks. The reserves had on February 5, stood at $46.004 billion, data from the Central Bank of Nigeria (CBN) website had shown.

    Given the steady increase of oil prices, the external reserves have been rising impressively. Other factors that impacted positively on the reserves were the swelling of the excess crude account. The reserves had maintained a steady rise from $45.263 on January 21; $45.35 on January 22; $45.425 on January 23 and $45.78 on January 28.

    The reserves had gained nearly $10 billion in the last six months. It was $36.35 billion on August 7; rose to $36.41 in August 8; $36.46 in August 9 and $36.51 in August 10. It had dropped to $36.36 billion in July 20, from $37.19 billion four weeks earlier, losing about $830 million within the period.

    The foreign currency reserves rose to $68 billion in August 2008 before the global financial crises impacted negatively on it. The apex bank had consistently maintained that inflow into the reserves was not consistent with the oil prices and, this underscored the need for tighter fiscal controls around oil revenues.

     

  • Experts hail govt on reserves

    Nigeria’s decision to put 10 per cent of its $46.5 billion reserves in Chinese Yuan has been described as a wise and strategic decision by global investment experts. Other currencies in the basket are in Euros, Pounds and Riyal.

    Speaking at a trade and investment in global market forum in Lagos, Amro Zakaria, Managing Director, Market Trader Academy (MTA), based in Dubai, United Arab Emirates, said China is one of the biggest trading partners of Nigeria and as such, diversification would protect the naira from currency war going on among Japan, Europe and America. Japan’s plan to devalue its currency to give its economy a boost is being opposed by Europe and America.

    Zakaria said aside reserves diversification, Nigeria should also diversify her economy away from oil, having discovered that its biggest buyer, United States of America will achieve energy independence by 2020. He said that although the country may identify new buyers of its crude oil, the most dependable and trusted buyer, the United States of America, may not be there anymore.

    He said Nigeria’s best resource remains its youthful population, adding that with proper education, the country’s development will no longer be dependent on oil.

    Zakaria said the company is committed to educating the youth on how the global market works. He said there was need to carry the campaign to schools and higher institutions. He said there was also the need for the youth to tap into the global market and explore opportunities there. He hinged this on improvement in education and communication among the youths.

    Zakaria explained that learning about global markets and economic trends through education will afford Nigerians the opportunity to diversify their investment portfolios and to compete effectively in an ever globalised world.

    Describing Nigeria as an emerging market with lots of potential, he advised that trading and investments in global equities, precious metals, forex, etc will further empower the people and improve their chances in mitigating adverse effects caused by current and future global events.

    Also, Chief Business Development Officer, World Wide Markets Limited (WWM), based in United States of America, Steven Santamouris, who spoke on Learn to trade and invest in global markets, described World Wide Markets as one of the leading brokerage firms offering access to global markets including “exchange traded US equities.”

    He noted that clients should be armed with a true and detailed understanding of how the FX Brokerage business operates from the inside out.

    He described WWM partnership with the Market Trader Academy as strategic, saying it would provide the Academy with necessary technical expertise for traders to navigate the volatility of the markets through knowledge of those markets as well as risk management strategies.

     

  • Dollar accounts for 83% of Nigeria’s foreign reserves

    Dollar holdings constitute 83.2 per cent of the country’s foreign reserves, figures obtained from the Central Bank of Nigeria (CBN) website has revealed.

    Other currencies in the basket are Euro 6.2 per cent; Pounds two per cent; Yuan 2.06 per cent and Riyal units worth $2.58 billion, representing 6.4 per cent.

    Further analysis revealed that the Reserve Portfolio was dominated by fixed deposits, which accounted for 47.3 per cent; funds under Asset Management 20.9 per cent; Joint Venture Company (JVC) cash call, 5.6 per cent and current account, 5.5 per cent as well as Sovereign Wealth Fund, 2.5 per cent.

    The reserves as at end of September 2012 stood at $40.64 billion as against $35.41 billion and $31.74 billion in second quarter, and third quarter, 2011. The share of the CBN holdings stood at 68.9 per cent while the share of the federation comprising the three tiers of government and Federal Government stood at 22.8 and 8.3 per cent.

    According to the report, the reserves could finance 17.8 months of foreign exchange disbursements and 11.44 months of imports in third quarter, 2012 compared with 11.4 months of foreign exchange disbursements and 7.33 months of import in second quarter, 2012. The reserves recorded an accretion of $5.23 billion in the third quarter over its level in the second quarter 2012 largely due to positive terms of trade shock.

    Total external reserves was $40.64 billion as at September ending 2012, which represented increases of 14.8 and 28.0 per cent when compared with the levels recorded in the preceding quarter and the corresponding quarter of 2011.

    The reserve was $44.6 billion as at January 10, 2013. Also, the aggregate demand for foreign exchange by the authorised dealers consisting of Wholesale Dutch Auction System (WDAS) and Bureau De Change (BDC) operators during the third quarter of last year stood at $6.51 billion, indicating a decline of 9.34 per cent and 51.92 per cent when compared with the levels recorded in the preceding quarter and corresponding quarter of 2011.

    A total amount of $6.49 billion was supplied in the review period consisting of $5.34 billion and $1.15 billion to the Wholesale Dutch Auction System (WDAS) and BDC operators. This indicated a decline of 7.86 and 42.47 per cent when compared with the second quarter of last year and third quarter, 2011.

    Also, a total of $9.69 billion was utilised during the review period consisting of $6.47 billion and $3.23 billion for visible and invisible trade.

    This represented 66.72 and 33.28 per cent. Further analysis showed that foreign exchange utilised for visible transactions has remained dominant over the last three quarters of last year.

    An analysis of foreign exchange utilisation by sectors revealed that $6.47 billion or 66.72 per cent was spent on the importation in the third quarter of last year. The importation of oil, industrial, food and manufactured products accounted for 29, 27, 19 and 16 per cent of the total amount utilised for visible imports.

    Also, $3.23 billion was expended on services, which comprised financial S$2.14 billion; business $0.27 billion; transportation – $0.44 billion while “others” accounted for the balance.

     

  • Edo tribunal reserves date for judgment

    The Edo State Governorship Electoral Tribunal has reserved judgment in the petition filed by the Peoples Democratic Party (PDP) candidate, Charles Airhiavbere , on the outcome of the July 14 governorship election.

    Airhiavbere is challenging the qualification of Governor Adams Oshiomhole to contest the election.

    Tribunal Chairman Justice Pindinga Mu’azu adjourned sitting sine die after listening to the adoption of written addresses by counsel to parties.

    Justice Mu’azu said the date of judgment would be communicated to the parties.

    Oshiomhole ‘s lead counsel Adeniyi Akintola said the petitioner’s conclusion in his final address was silent on corrupt practices and non-compliance and that it was not a ground before the tribunal.

    Adeniyi said the Court of Appeal made no findings as to whether the ground covered non-qualification.

    He said statements from witnesses called from four local governments were based on corrupt practices and not on non-qualification.

    “The entire piece of evidence, including the affirmation, covers 61 units out of 2,624 units in the state.

    “Can a person who admitted that he lost an election ask to be returned as winner in his relief?

    “The relief is not available. It did not flow from the petitioner’s facts presented before your Lordship.”

    Adeniyi described the petition as the most frivolous petition in the country, saying the petitioner did not present any result sheet before the tribunal.

    Counsel to the Action Congress of Nigeria (ACN) Adetunji Oyeyipo said the petitioner failed to prove the allegations of forgery.

    Oyeyipo said the relief sought by the petitioner was not available.

    Counsel to the Independent National Electoral Commission (INEC) Robert Emupero said the burden was on the petitioner to prove non-qualification and urged the tribunal to dismiss the petition.

    Airhiavbere’s counsel Efe Akpofure urged the tribunal to deliver judgment in favour of the petitioner.

    Akpofure said it was Oshiomhole’s duty to prove that he owns the certificates presented before INEC.

    He urged the tribunal to declare a vacancy in the Edo Government House and returned Airhiavbere as the substantive governor.

  • FG and reserves

    FG and reserves

    THE nation’s foreign reserve has been growing in leaps and bounds. So says a report credited to the Central Bank of Nigeria (CBN). At the end of December 2012, the foreign reserve reportedly stood at $44.26 billion – an impressive figure compared with 2011 year’s end figure of $32.92 billion – a quantum leap of $11.34 billion or 34 percent.

    Similarly, the excess crude account 9ECA) – the differential between the benchmark price for crude set in the budget and its actual price – at the close of the year stood at $9.66billion. Both of course are reported as falling short of government’s projections of $50 billion for the reserve and $10 million for the (ECA) for the year.

    The indication that the economy is now better primed to finance greater/more months of imports should offer only limited consolation. We say this mindful of the two sides to the reserve build-up. One is the capacity to earn foreign exchange; the other is the nation’s propensity for imports. It is the interplay of the two that determines the level of the reserve.

    Last year, for instance, oil remained the dominant determinant of the nation’s economic fortune. Production was fairly stable, just as global oil prices held relatively steady above the benchmark price set in the budget. The same was true for the ECA – the differential between the benchmark price set in the budget and the actual price of crude was sustained.

    But then, can we dare to suggest that our propensity for foreign goods was in any way curbed in the past year? The truth of course is that the nation remained a net importer of everything, from refined petroleum products to consumables. The fortunes of manufacturing and the real sector remained at their lowest ebb. Limited domestic manufacturing meant that demand for imported goods remained uncurbed, with negative consequences for the value of the naira.

    The trend could therefore be explained by the factor of oil; a case of dollar earnings outstripping import bills.

    Without question, there are great merits in having a robust foreign reserve. This is even more so for an oil-dependent economy known for its cyclic volatility. The same arguments could also be validly made for savings for the rainy day.

    The danger here is to treat the reserves not as a means but an end in itself. At issue is the failure to recognise the imperative of current investment in infrastructure not just as a strategy to build future capacity for the economy, but as a bulwark to insulate the economy from future potential shocks. It is at the heart of the debate on investment versus savings – which should take precedence, particularly in an economy with huge infrastructure gaps.

    Of course, the desire by the Jonathan administration to take the credit for growing the two accounts – something that has increasingly become an obsession – would seem to flow from the desire to be seen as a thrifty administration. A little while ago, a self-proclaimed debt-averse Obasanjo administration grew both the foreign reserve and the ECA to an impressive $60 billion and $35 billion, respectively –at a time the nation’s infrastructure were yearning to be fixed. The nation would later learn at a great cost that the huge reserves are themselves no guarantee for fiscal stability and economic development; it is certainly no guarantee that Foreign Direct Investment would come.

    We are convinced that the way to go is to invest massively in infrastructure. That is the only way to steer the economy away from the current consumptive path to a productive one. It is a far better insurance for the future. Locking up the nation’s earnings in the guise of off-shore savings is hardly the way to achieve the latter, just as there can be no better path to the future than today’s investment.

  • Court reserves ruling on Airhiavbere’s appeal

    The Court of Appeal, sitting in Benin, the Edo State capital, yesterday reserved ruling on the appeal filed by Maj.-Gen. Charles Airhiavbere (rtd.), the governorship candidate of the Peoples Democratic Party (PDP) in the July 14 election.

    Airhiavbere is seeking permission to call more witnesses to testify at the Election Petition Tribunal.

    He went to the Appeal Court when the lower tribunal refused his application to call more witnesses in addition to the 31 listed in his petition.

    Yesterday, Airhiavbere’s counsel Kingsley Obamogie told the court that the tribunal’s ruling against the application was influenced by an earlier ruling of the dissolved panel of the tribunal on September 27, which ruled that the part of the petition centred on Governor Adams Oshiomhole’s academic qualification was a pre-election matter.

    He said the September 27 ruling had been upturned by the Appeal Court and urged the Justice George Shoremi-led panel to uphold the appeal.

    Oshiomhole’s counsel Wole Olanipekun (SAN) said the application was sequel to the withdrawal of the PDP as a co-petitioner.

    He urged the panel to uphold the lower tribunal’s ruling .

    Justice Shoremi led adjourned ruling till a later date.

     

  • Voter cards: Court reserves ruling till Oct 22

    An Akure Chief Magistrate’s Court, presided over by Magistrate J. O. Adelegan, yesterday reserved ruling till October 22 in an application for bail brought by Labour Party (LP) chieftains, Mr. Olaolu Oladipo and Omolade Raphael.

    They were charged to court on Monday for conspiracy and unlawful possession of 1,123 voter’s cards.

    The offence was allegedly committed on October 5 about 4:30pm at the Independent National Electoral Commission (INEC) office in Ondo West Local Government.

    At the resumed hearing of the case yesterday, the police prosecutor objected to the bail application of the accused on the grounds that by virtue of Section 150(2), it is only INEC or its lawyer that can prosecute an electoral offender under the Electoral Act.

    The prosecutor noted that he could not under the law respond to the bail application.

    He sought for an adjournment to contact (INEC) to take over the case or appoint a prosecutor.