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Euro hits record high against Naira, surges to N1,667.298 in black market

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By Sodiq Adelakun

The Euro has reached unprecedented heights against the Nigerian Naira, soaring to an exchange rate of N1,667.298 in the black market as of March 20, 2024.

This surge underscores a remarkable 46 percent appreciation of the European currency over the past year compared to the Naira.

The parallel market, often termed the black market, reflects the fluidity of the foreign exchange sector, driven primarily by supply and demand dynamics rather than official central bank rates.

This significant fluctuation underscores the challenges faced by Nigeria’s economy and the impact on its citizens, highlighting the need for robust economic policies to stabilise currency markets and mitigate inflationary pressures.

This rate is crucial for Nigerians engaging in transactions with Europe, whether for business, education, or tourism purposes.

Traditionally, Bureau De Change Operators (BDCs), commonly referred to as ‘Abokis,’ facilitate the majority of these foreign currency exchanges in Nigeria.

These operators are known for providing rates that are more attractive than those offered by commercial banks, coupled with the advantage of speed and convenience in transactions.

However, the attractiveness of the black market rates comes with the caveat of regulatory absence.

The government and the Central Bank of Nigeria (CBN) do not regulate these rates, leading to their determination by the prevailing market forces within the informal sector.

Such a scenario often results in exchange rates that are markedly higher than the official figures.

The susceptibility of the black market to rapid fluctuations is influenced by a myriad of elements, including the availability of foreign currency, overarching economic conditions, and speculative trading.

These factors collectively contribute to the inherently volatile nature of black market exchange rates, presenting challenges for individuals and businesses alike navigating currency transactions.

With the Euro currently pegged at N1,667.298 to the Naira in the black market, the financial landscape for transactions involving these currencies is becoming increasingly complex. For instance, at this exchange rate, 100 Euros would translate to approximately N166,729.80, while 1,000 Euros would command a hefty N1,667,298.00.

This surge in the Euro’s value against the Naira underscores the impact of external factors on Nigeria’s economy and the daily lives of its citizens. As fluctuations persist, individuals and businesses must navigate these challenges with caution, highlighting the need for adaptable financial strategies in the face of volatile currency markets.

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Money market

Wema Bank will remain national bank — Oseni

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The Managing Director/Chief Executive Officer of Wema Bank, Moruf Oseni, has disclosed that after the fresh banking sector recapitalisation, the bank would retain its national licence while aiming for tier-1 banking status.

Oseni said this during the week at the Annual General Meeting of the bank, held virtually.

Disclosing the bank’s progress towards realising the recapitalisation minimum target of N200bn, set by the Central Bank of Nigeria, Oseni said, “The apex bank has done its due diligence and approved our N40bn rights issue, which is currently undergoing Securities and Exchange Commission approval to be listed on the Nigerian Exchange.

“Our capital base now stands not at the current N15bn but, with the rights issue, at N55bn—significant headway towards N200bn.

“Following the shareholders’ and board’s approval, we are set to raise the N200bn within the 24-month timeline through public placements and a public offer, which we are confident that we will achieve before the timeline expires.

“We have shared our plans with the CBN, and we will work assiduously to balance our capital base in the nearest future.

“At a minimum, Wema Bank will remain a national bank, we will keep working tenaciously to become a systematically important bank, reattain tier-1 status, and continue providing optimum value for every shareholder and stakeholder of Wema Bank.”

During the AGM, the shareholders approved a N0.50 dividend for 2023, as well as the appointment of two new non-executive directors of the bank; Yewande Zaccheaus and Yusuf Kazaure, and the new executive director, Segun Opeke, as new additions to Wema Bank Board of Directors.

At the end of 2023, Wema Bank recorded a 196 per cent increase in profit before tax from N14.75bn to N43.59bn and a 220.4 per cent increase in profit after tax from N11.21bn to N33.66bn.

Its gross earnings rose from N132.30bn to N225.75, indicating a 70.63 percent increase.

Commending the bank’s 2023 results, a shareholder, Mr Badmus Tunde, said, “Since 1945, Wema Bank has seen the good, the bad, the beautiful and the ugly, and through thick and thin, it has gotten to where it is today. The results are overwhelming, and profitability has been maintained. Kudos to the board and management.”

Wema Bank, one of the oldest banks in Nigeria, recently celebrated its 79th anniversary.

It is also the pioneer of Africa’s first fully digital bank, ALAT, which is in its seventh year of operations.

Its gross earnings rose from N132.30bn to N225.75, indicating a 70.63 percent increase.

Commending the bank’s 2023 results, a shareholder, Mr Badmus Tunde, said, “Since 1945, Wema Bank has seen the good, the bad, the beautiful and the ugly, and through thick and thin, it has gotten to where it is today. The results are overwhelming, and profitability has been maintained. Kudos to the board and management.”

Wema Bank, one of the oldest banks in Nigeria, recently celebrated its 79th anniversary.

It is also the pioneer of Africa’s first fully digital bank, ALAT, which is in its seventh year of operations.

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Money market

Access Holdings calls for responsible use of AI at Smart Banking Summit

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Access Holdings PLC, a leading financial services group, has echoed the need for ethical considerations in using Artificial Intelligence (AI), calling stakeholders in the financial industry to factor its sustainability implications.

This call to action was driven by a compelling keynote address delivered by Executive Director of IT & Digitalisation at Access Holdings, Lanre Bamisebi, at the Smart Banking Summit 2024 held in Kenya on Wednesday.

Speaking on the topic, “AI Guardians: Securing Compliance and Mitigating Risks,” Bamisebi’s keynote shed light on the imperative to strike a balance between innovation and responsibility as the banking sector and broader society embrace AI’s transformative potential.

“Artificial Intelligence has the power to revolutionise our societies. Over the years, this has become increasingly evident, offering unprecedented opportunities for growth, efficiency, and innovation.

“From enhancing customer service to optimising risk management, AI’s potential benefits in finance are vast. However, as we embrace AI, we must also ensure that its deployment is ethical, secure, and compliant with regulatory standards to mitigate risks effectively,” he said.

As the transformative power of AI continues to fuel innovation, concerns remain about its negative impact on the environment. According to OpenAI researchers, since 2012, the amount of computing power required to train cutting-edge AI models has doubled every 3.4 months.

They also posit that by 2040, the emissions from the Information and Communications Technology (ICT) industry will reach 14 percent of the global emissions, with the bulk of those emissions coming from ICT infrastructure, particularly data centres and communication networks.

Speaking to these concerns, Bamisebi said, “The exponential growth of AI adoption must be met with thoughtful consideration for its environmental footprint.

“As we harness the power of AI, we must prioritise sustainable practices to mitigate its energy consumption and carbon emissions, ensuring a harmonious coexistence between technological advancement and environmental preservation.

“We must embrace our roles as guardians, and place comprehensive regulatory frameworks, ethical standards, and continuous learning at the fore of our considerations so that we create a future that is safe, inclusive, and prosperous for all,” Bamisebi charged.

Themed ‘Navigating the Next: Africa’s Leap into Smart, Secure, and Inclusive Banking,’ the summit was a pivotal gathering of leaders spearheading the digital evolution in the African banking and finance space.

Other contributors at the summit include Head of Product and Digital Banking, Access Bank Plc, Winnie Kaaka; Co-Founder and Chairman, dx5, Harry Hare; CIO/CTO, Absa, Moses Okundi;  CISO, Safaricom/M-Pesa Africa, Tim Theuri; CISO, SunTrust Bank Nigeria Ltd, Daniel Adaramola; Founder and CEO, Metis Technology Solutions Ltd, Steve Njenga, and more.

Access Holdings Plc is a leading multinational financial services group that offers commercial banking, lending, payment, insurance, and asset management services. Headquartered in Lagos, Nigeria, Access Holdings operates through a network of more than 700 branches and service outlets, spanning three continents, 21 countries, and 60+ million customers.

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Money market

Exchange rate gains tied to $1.3bn maturing NDFs, CBN’s interventions

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The naira has experienced consecutive double-digit appreciation on the official market, and sources say that the Central Bank of Nigeria (CBN) has been selling more dollars on the official market in anticipation of a $1.3 billion non-deliverable forward (NDF) maturing today Wednesday, May 29, 2024.

On Monday, the exchange rate between the naira and the dollar saw a significant appreciation of 10.71 percent, closing the day at N1,339.33/$1 on the Nigerian Autonomous Foreign Exchange Market (NAFEM) window.

This appreciation marked the highest closing rate since April 26, when the exchange rate was N1,339.23/$1, based on data from FMDQ. It was also the biggest currency appreciation rate in two months since May 20 when it recorded a rate of 12.84 percent.

However, the foreign exchange (FX) turnover decreased sharply by 67.50 percent, amounting to $180.8 million on Monday.

By Tuesday, there was a significant surge in FX turnover, which increased by 81.59 percent to $328.32 million as the apex bank sold more forex on the market.

The naira also surged to N1,1173.88/$1 on the NAFEM window, marking an increase of 14.09 percent from the previous day’s rate. This is the highest one-day increase since January 2024.

According to sources with knowledge of the matter who spoke with newsmen, the Central Bank of Nigeria (CBN) has reverted to its previous strategy of selling foreign currency below the market rate. This move is aimed at artificially lowering the exchange rate.

The sources, fearing victimisation, requested to remain anonymous.

The push for a significant appreciation was tied to the maturing $1.3 billion NDF today as the CBN “needs to lower the reference rate to reduce payout.”

According to data from the FMDQ, the $1.3 billion NDF makes up about 82 percent of the total NDFs open contracts ($1.58 billion) as of May 24, 2024.

The sources added that the CBN will likely “manage” the rate a lot lower today, Wednesday, May 29, as a way to celebrate the one-year anniversary of the president of Nigeria, Bola Tinubu.

Confirming what sources told us, the Chairman of Skymark Partners Limited, Egie Akpata, “What contributed to the appreciation was the significant amount of central bank’s dollar sales on Monday and Tuesday.”

He noted that if the central bank continues the sale of dollars as they did on Monday and Tuesday, there is a possibility of maintaining the naira appreciation.

Providing further specifics on the interventions, a Private Wealth Advisor for a Lagos firm, Damilola Alonge, told Nairametrics that said, “The apex bank intervened at the NAFEM twice yesterday. The first round of intervention was about $3 million and the second round at $2 million.”

He added that successful bids were within N1,260 and N1,320 for the first intervention on Tuesday, while the second intervention was between N1,160 and N1,250.

On Monday, he disclosed that CBN intervened in two tranches with $2 million sold. The interventions were around the rates of N1,380 and N1,400 while the second intervention was around N1,310 and N1,370.

The total intervention size on Monday was estimated to be around $80 million on Monday and $97 million.

However, our sources said that the total intervention was around $200 million.

Alonge added that this intervention is yet to have much impact in the parallel market, where the naira still sold for about N1,400. yesterday.

Recall that the Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, said that the bank has no intention to defend the naira.

He stressed that there were no future intentions to defend the currency with the external reserves, as it was counterintuitive since the apex bank was already implementing a willing buyer, willing seller policy.

However, although it seems the apex bank has paused selling foreign exchange to Bureau de Change (BDC) operators, it appears that it is yet to step down from intervening in the official market to defend the naira.

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