Naira to Appreciate Against the Dollar

The naira is expected to appreciate at the black market next week after the Central Bank of Nigeria proposed an increased dollar sale to BDC operators.

The CBN is planning to raise dollar sales to each of the BDCs to $40,000 from the present $20,000, which will improve liquidity and help support the local currency.

The naira was quoted at 410 to the dollar on the black market on Friday, compared with 398 the previous Friday.

At the official window, it closed at N306.10 to the dollar on Thursday against N306.20 per dollar last week.

CBN Auctions $418m to Aviation, oil, Agric Sectors

The Central Bank of Nigeria (CBN) has auctioned $418 million at a marginal rate of N310 to a dollar, to airlines, agriculture, petroleum and raw materials sub sectors.

The CBN acting Director, Corporate Communications, Mr Isaac Okorafor said in Abuja that the $480m offered last week was in addition to the $350 million sold as wholesale auction for travel allowance and school fees at the same period.

He said that in the weeks ahead, the CBN would further sustain its intervention through the sale of foreign exchange to all segments of the market, like the interbank and the Bureau de Change segment.

“The Bank will sell short tenured forwards of 7 to 30-day maturity to meet demand of manufacturers and all other foreign exchange users.

“These significant injections of foreign exchange into the market should reassure all foreign exchange users of our determination to continue to meet all legitimate forex demand in the market,” he said.

Okorafor reiterated the bank’s commitment to achieving exchange rate stability in the Nigeria market.

The CBN in recent months had injected dollars to the inter-bank and Bureau de Change foreign exchange market in its bid to sustain forex supply to different categories of users.

This translated to the appreciation of the Naira from an all time low of about N560 to a dollar, to N355 within two months.

However, in the last two weeks, the Naira began to weaken again against the dollar, which was attributed to alleged hoarding of the greenback by commercial banks, and insufficient supply to the BDC segments and other stakeholders.

To remedy this, the CBN had threatened to penalise any bank refusing to sell forex to customers.

Also, forex supply to the BDC was increased from 8,000 dollars per week to 10,000 dollars.

The Naira now sells at N405 to a dollar in the parallel market.

NAN

Don’t Float Naira, Uwaleke Warns CBN

An economic expert, Prof Uche Uwaleke, on Wednesday urged the Central Bank of Nigeria (CBN ) to tread with caution in their decision to float the naira.

In a media interview, Uwaleke said Nigeria’s apex bank must ensure the economy was sufficiently diversified before considering the option of floating the nairaIn the meantime, he urged the CBN to maintain its intervention in the Forex market as it had resulted in increased supply of Forex in the economy.

He said “In the light of the favourable international oil market condition, the CBN interventions in the Forex market should be sustained.

” As long as the source of the Forex remains chiefly oil, the apex bank should continue to ignore calls to float the naira until the export base of the economy is sufficiently diversified.

 

” The recent Forex rules have also resulted in improved access to Forex, especially for invisibles to the extent that banks are now encouraging their customers to come for BTAs etc.

” In view of the less stringent conditions attached, the requirement for tax clearance certificate has been removed.

“The CBN’s directive with respect to opening offices at airports and the use of dedicated teller points by commercial banks has also contributed to improving access to forex.”

CBN to Sustain Foreign Exchange Liquidity

The Central Bank of Nigeria (CBN) on Sunday reiterated its determination to sustain the provision of foreign exchange with a view to ensuring liquidity in the market and enhance accessibility and affordability for genuine end users.

The apex bank’s acting Director, Corporate Communications, Mr Isaac Okorafor in a statement said the bank wants to disabuse the notion by market speculators that it wouldn’t be able to sustain its forex intervention.

He said that the bank would again, early this week, inject more foreign exchange into the market, leading to a further weakening of the dollar.

“This is in addition to the further increase in the sale of dollars to the Bureau de change operators from 8,000 dollars to 10,000 dollars per week,’’ he said

Okorafor warned commercial banks and other dealers to desist from sabotaging the efforts aimed at making life easier for foreign exchange end users.

According to Okorafor, the CBN had received complaints from customers over frustrations in getting foreign exchange for invisible items like tuition fee, medicals, personal and basic travel allowance.

The Bank urged the general public to report any bank that failed to meet customers’ needs after due documentation.

It once again reiterated its determination to deal with any official or institution found to be sabotaging the operations of foreign exchange market in whatever guise.

It would be recalled that the Naira closed at N394 to a dollar on Friday, which translated to 10 per cent depreciation of what was recorded earlier in the week.

The depreciation was attributed to the alleged hoarding of forex by banks rather than selling to genuine customers.

Analyst believe that with the twice weekly sale to BDCs up to 20,000 dollars, the Naira is likely to appreciate in the coming week.

NAN

CBN introduces new FX rates

The Central Bank of Nigeria on Monday introduced new N360 per dollar as the new rate for invisibles, such as school fees, medical bills and travel allowances. This is as against N375.

“The CBN [is] to sell forex to banks at N357/$1, while banks will sell to their customers at N360/$1 for invisibles (BTA, medicals, fees, etc),” the apex bank said on Monday. “CBN directs banks to post new rates in the banking halls of their branches immediately. CBN examiners to visit banks to ensure the new rates are implemented.

“CBN prohibits banks from selling forex funds meant for invisibles to BDCs”

Naira Now N385 to a Dollar

The naira strengthened to 385 to the dollar on the black market on Thursday, from 395 on Wednesday, and from 457 last Thursday.

At the Bureau De Change (BDC) window, the Naira closed at N400, while the Pound Sterling and the Euro traded at N530 and N465 respectively.

Trading at the interbank market saw the Naira weaker at N308.00 from N307.75 recorded on Wednesday.

Currency traders expressed the hope that the continuous appreciation of the Naira would affect the economy positively.

Meanwhile, the Association of Bureau De Change Operators of Nigeria (ABCON) has urged the Central Bank of Nigeria (CBN) to loosen its policies on foreign direct inflow and Diaspora remittances as part of efforts at rate convergence.

ABCON President, Alhaji Aminu Gwadabe said that recent development in the FOREX market had made it important for the CBN to review the rate at which it sells FOREX to BDCs.

Gwadabe explained that a fair playing ground for all operators at the FOREX market was needed for the CBN to achieve its goal for rate convergence at the market.

NAN

Foreign Investors’ Acquisition of Local Firms Over Forex Looms

Unless the Central Bank of Nigeria (CBN) is consistent in making foreign exchange (forex) available for manufacturers to import raw materials that are yet to have local alternatives, foreign investors with access to cheaper funds may acquire controlling stakes in these local firms.

Already, some firms that are unable to sustain their operations, having suffered huge losses in 2016 due to currency adjustments and inadequate access to forex, are being acquired by new investors, while others are exploring the Nigerian Stock Exchange (NSE) by way of rights issue before considering bailout from their parent companies. Indeed, many listed local producers lost over N50 billion in profit across the food, beverages, conglomerates and drug manufacturing sectors.

As it is, the CBN which has been injecting forex into the system lately to stabilise the naira may have to do more to help the real sector. If the low supply of foreign exchange for local production continues, it means the control of the manufacturing sector will slip into the hands of foreign investors even as the growth of local content remains inhibited when returns on investments are repatriated from the economy.

For instance, the parent company of Guinness Nigeria Plc – Diageo – is already planning to take up its rights by way of a debt/equity swap wherein the outstanding foreign currency loan (N20.3 billion as at first half of 2017) from Diageo will be used as payment for its rights in Guinness.

The acquisition of Nigeria’s Swiss Pharmaceutical Company (Swipha), was completed at the weekend with the French generic medicine manufacturer, Biogaran, announcing over 95 per cent stake in the company.

For Nestle Nigeria Plc, its profit after tax was negatively impacted both by the revaluation of foreign loans resulting from the devaluation of the naira and higher income tax provisions due to the expiration of the pioneer status. The company closed the year at N7.9 billion profit from N23.7 billion in 2015.

The capacity utilisation in the nation’s drug manufacturing sector and other productive sectors had dropped to an all-time low of 20 per cent due to inadequate access to foreign exchange for the importation of critical raw materials, mainly active pharmaceutical ingredients (APIs) and machinery inputs. There is also the challenge of competition from poorly regulated markets.

The acquisition of Swipha may have been made possible due to the inability of the Nigerian firm to sustain its operations arising from the high cost of doing business and huge debt.

Guinness Nigeria Plc suffered a loss of N4.7 billion in 2016 from a profit after tax of N1.17 billion in 2015, even as it announced a rights issue price at N58.00, 17% discount, to market price.

The company intends to use the funds to improve its balance sheet given its relatively high debt level (Debt/Equity ratio of 1.3 vs. Nigerian Breweries of 0.1), finance its working capital needs and expand its operations.

The Nigerian Breweries, following the huge forex loss, ended the year with profit before tax of N39.675 billion, down from N54.514 billion in 2015 and profit after tax of N28.416 billion as against N38.05 billion in 2015.

On plans for the acquired Swipha, President of Biogaran, Pascal Brière told The Guardian that the new management’s first priority would be the revitalisation of the company and give confidence to employees on its commitment to a prosperous future.

The President of the Manufacturers Association of Nigeria (MAN), Dr. Frank Jacobs, however, dismissed the notion of firms selling their factories to new owners, saying that the CBN had cleared many of the backlogs of foreign exchange, thus, bringing firms back in business.

He said that 2016 was a terrible year for everybody but businesses were able to sustain their operations.

“Situations may be very difficult; it may also be that some businesses are relocating or seeking new areas of investments, but they are not closing down. I know it is part of the things that happened in the course of the forex crisis. Once an area of business is no longer lucrative, chances are that the business divests, but it does not mean that it is closing operations. They may not be doing it exclusively because of scarcity of forex but due to infrastructure challenges, among others,” Jacobs said.

According to a former National Coordinator of Independent Shareholders Association (ISAN), Sir Sunny Nwosu, the move by Guinness to raise capital from the stock exchange, though belated, is in the right direction, considering the need of the firm to sustain its business and enhance shareholders’ return on investments.

The Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah, has admitted that some of the policies implemented by the Federal Government affected manufacturers negatively.

Enelamah, who made the remarks in an interview with CNN in London, was quoted as saying: “Some policies we passed affected manufacturers in terms of their raw materials and we are correcting those now. We want to discourage dumping and bad practices that happened in the past. But we need to do it in a way that does not hurt local manufacturing.”

 

The Guardian

Naira Sinks To 490/$ As CBN Seeks End To Black Market

The Central Bank of Nigeria (CBN) is seeking to ensure there is no black market as the Naira sinks to 490 to a single dollar.

On Wednesday, the Naira was trading at 314 at the official market, with parallel market recording 490/$1.

The British pound stood at 605, while the European Union currency, Euro went for 510, a far cry of its 388, 327 range at the official side of the market respectively.

Vice President Yemi Osinbajo, and Kemi Adeosun, minister of finance, had previously said the CBN was working on a foreign exchange system that eliminates arbitrage in the forex market.

Isaac Okorafor, the spokesperson for the bank, was quoted by Reuters to have said the bank was “ensuring that the forex market operates as effectively as we would envisage”.

He also said the aim was to “ensure there is no black market” but did not give details of how this would be achieved.

Godwin Emefiele, governor of the CBN, had said consistency that the parallel market could not be used to evaluate the true value of the local currency.

“It is unfair to use the shallow market as a basis for determining the value of our currency. No one uses the Travelex rate at Heathrow to determine the exchange rate for the pound in the United Kingdom,” Emefiele had said.

“So it is unfair to use that to determine the value of our currency. Those who are dealing in the market are doing so illegally. We should not be encouraging the tendencies of those people who are involved in capital flight, or those who want to conduct foreign exchange business without providing necessary documentation.”

Naira Inches To N280 To The US Dollar

The Nigerian currency is making frantic efforts to reach the N280 to the dollar opening rate at the Financial Markets Dealers Qoute (FMDQ), the News Agency of Nigeria (NAN) reports.

The naira on Wednesday closed at N304.75 to the dollar at the official interbank market from N305 recorded on Tuesday.

At the Bureau De Change (BDC) window, the naira exchanged at N385 to the dollar,
while the pound sterling and the Euro traded at N550 and N504, respectively.

Trading at the parallel market saw the naira exchanging at N450, N545 and N495 to the dollar, pound sterling and the Euro, respectively.

Traders at the market expressed optimism that the licensing of additional 20 International Money Transfer Operators (IMTO) would bring more liquidity to the market.

NAN reports that in a bid to conserve the nation’s foreign reserve and to liberalise the foreign exchange market, the CBN is interfacing with IMTOs to sell the proceeds of Diaspora remittances to BDCs.

The decision of the CBN has borne very positive fruits as the naira continues to appreciate at the forex market. (NAN)

CBN Approves Special Forex Intervention For Airlines

The Central Bank of Nigeria, CBN, has approved a Special Secondary Market Intervention Retail Sales for airlines operating in the country to enable them access foreign exchange.

The Deputy Director, Press and Public Affairs, Ministry of Transportation, Mr. James Odaudu, announced the plan in a statement in Abuja on Friday.

Odaudu explained that the intervention was a direct result of the interaction with CBN by the Minister of State, Aviation, Sen. Hadi Sirika, on behalf of the airlines.

He said the intervention was an important one within the exercise dedicated to the clearance of the backlog of matured foreign exchange obligations.

Odaudu said the resolution by the apex bank to intervene in the interbank foreign exchange market through forward settlement was expected to engender market confidence.

He said that it would also ensure access to Forex by the airlines to settle their obligations and sustain the integrity of the Nigerian Inter-Bank Foreign Exchange market.

He said, “The import of this peculiar exercise is that the CBN will not apply the relevant provisions under clause 2.4.3 (i) of its Revised Guidelines for the Operation of the Nigerian Inter-Bank Foreign Exchange Market.

“It provides that ‘all SMIS bids shall be submitted to the CBN through the FXPDs.’

“Consequently, CBN shall receive bids from all the authorised dealers.

“The CBN will also not apply the relevant provisions that ‘Spot Forex sold to any particular end-user shall not exceed one per cent of the overall available funds on offer at each SMIS session.’

“According to the CBN, whereas the bids are on Spot Forex basis as the Authorised Dealers’ accounts with the CBN will be debited in full for the naira equivalent of the dollar bid amount.

“The CBN will settle the bids through forward settlements of two months.”

He said that customers that were not willing to accept the settlement terms had been advised not to participate in this Special SMIS- Retail.

Odaudu credited Sirika as describing the special intervention by CBN as a “great relief’’ for airline operators in the country.

He said the operators had complained bitterly over their inability to access the required Foreign Exchange to settle the backlog of their obligations which had adversely affected their operations.

Sirika said the aviation sector was critical to the nation’s economy, adding that CBN had taken the right decision that would strengthen existing airlines and inspire confidence in aspiring operators.

The airline operators at a recent meeting with the minister complained of a lack of access to Forex.

The airlines said that many airlines were not operating profitably.

Sirika, at the meeting promised, to take up the issues with the authorities of the apex bank and seek for intervention on their behalf.

Also to benefit from the intervention is raw materials and machineries for manufacturing companies and agricultural chemicals.

Naira Appreciates Against The Dollar

The Naira on Tuesday appreciated against the dollar at the parallel market, closing at N468 to a dollar, the News Agency of Nigeria (NAN) reports.

The Nigerian currency gained N2 from N470 it posted on Monday while it exchanged at N570 and N517 against the Pound Sterling and the Euro, respectively.

Trading at the Bureau De Change (BDC) segment of the market showed that the Naira was sold at the approved rate of N380 to the dollar, while Pound Sterling traded at N580 and Euro at N515.