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Forex backlog: CBN pumps additional $500m

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By Sodiq Adelakun

The Central Bank of Nigeria (CBN) has taken decisive action to alleviate the persistent backlog of confirmed foreign exchange (forex) transactions by introducing an additional $500 million into the market.

This strategic move follows closely on the heels of a substantial $2 billion injection the previous week, aimed at clearing outstanding obligations in key sectors such as manufacturing, aviation, and petroleum.

On Monday, January 29, in the nation’s capital, Abuja, Mrs. Hakama Sidi Ali, who is serving as the Acting Director of the Corporate Communications Department at the CBN, disclosed these developments.

She emphasised the bank’s unwavering resolve to swiftly address all legitimate forex backlogs. “The CBN’s management is dedicated to resolving all legitimate foreign exchange arrears promptly,” Sidi Ali declared, providing a sense of reassurance to stakeholders.

Furthermore, Sidi Ali conveyed to the Nigerian populace that the CBN is not only tackling immediate liquidity challenges but is also deploying a holistic strategy designed to enhance the flow of foreign exchange in the Nigerian market across short, medium, and long-term horizons.

She elaborated that this comprehensive plan is tailored to confront and rectify the core issues that have historically impeded the smooth functioning of Nigeria’s forex markets.

“As the Governor has articulated, our focus at the CBN is to tackle the root problems that have long obstructed the efficient operation of the Nigerian FX markets,” Sidi Ali stated, underscoring the bank’s strategic focus.

She added, “As the governor said, the CBN’s focus is on addressing fundamental issues that have hindered the effective operation of the Nigerian FX markets over the years.”

The forex market reforms, Sidi Ali explained, are designed to streamline and unify multiple exchange rates, foster transparency, and reduce arbitrage opportunities. She expressed confidence that a stable exchange rate would boost investor confidence and attract foreign investment.

She said, “We believe that a stable exchange rate will boost investor confidence and attract foreign investment.”

Sidi Ali urged all participants in the forex market to play by the rules, emphasising that transparency in the market would enable the fair determination of exchange rates and, by extension, guarantee stability for businesses and individuals alike.

She said, “We urge all participants in the market to play by the rules. Transparency in the market will enable the fair determination of exchange rates and, by extension, guarantee stability for businesses and individuals alike.”

The CBN’s latest intervention is part of a series of measures taken by the bank in recent months to address the forex backlog.

Over the past few months, the bank has released various sums in its effort to clear the backlog of foreign exchange liabilities.

Money market

FG urges NIPSS members on creative solutions to national challenge

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The Minister of Budget and Economic Planning, Atiku Bagudu, has urged members of the National Institute for Policy and Strategic Studies (NIPSS), to devise creative solutions to Nigeria’s social and economic challenges.

Bagudu received  participants of the Senior Executive Course 46 of the institute in his office on Monday in Abuja.

According to him, some of the issues confronting Nigeria  as a nation might require out of the box solutions.

“The NIPSS was created in the wisdom of our forefathers, to train senior management personnel that can bring unusual solutions to problems confronting us,” he said.

He urged the participants to eschew self-interest and make decisions that can assist the nation to make better choices.

Bagudu  said that the national planning function of the ministry comes from the National Planning Commission.

He said that the digital economy is one area that the ministry was looking at for mass youth engagement and economic prosperity.

“Digital economy is an evolving process.which the country will have to leverage digital for overall growth and development.

“It is a new reality. Today trading platforms are closing shop and increasingly going digital.

“Nigeria needs to respond positively and reap benefits from the digital economy. But we have to make the space safe through effective regulation.

“Some countries have data protection laws which enable them to check and regulate excesses in the digital space,” he said.

The Minister commended the law enforcement agencies for promptly going after digital platforms like Binance, which was used to disrupt the foreign exchange market and to weaken the Naira.

He also commended the Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, for his various monetary policy decisions that restored confidence in the Nigerian economy.

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Cardoso to speaks at IMF meeting on FX reforms

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The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso will speak on foreign exchange (FX) market reforms at the ongoing International Monetary Fund (IMF) Spring Meetings on Wednesday in Washington D.C.

The meetings of the Boards of Governors of the IMF and the World Bank Group (WBG) bring together central bankers, ministers of finance and development, parliamentarians, private sector executives, representatives from civil society organisations and academics to discuss issues of global concern, including the world economic outlook, poverty eradication, economic development, and aid effectiveness.

Also featured are seminars, regional briefings, press conferences, and many other events focused on the global economy, international development, and the world’s financial system

Cardoso assumed office as the Governor of the CBN in September 2023. Since then he has introduced some new FX policies and adjusted some existing ones to ensure the stability of the naira.

According to Cardoso, the exchange rate in Nigeria has increased/depreciated due to the simultaneous occurrence of two factors: a decline in the supply of US Dollars coinciding with a surge in the demand for US dollars.

He said in February 2023 that the foreign exchange market is currently facing increased demand pressures, causing a continuous decline in the value of the naira. Factors contributing to this situation include speculative forex demand, inadequate forex supply due to non-remittance of crude oil earnings to the CBN, increased capital outflows, and excess liquidity from fiscal activities.

To address exchange rate volatility, he said a comprehensive strategy has been initiated to enhance liquidity in the FX markets.

This includes unifying FX market segments, clearing outstanding FX obligations, introducing new operational mechanisms for BDCs, enforcing the Net Open Position limit, and adjusting the remunerable Standing Deposit Facility cap.

As part of measures to control inflation and stabilise the naira, the CBN last month raised its benchmark interest rate, known as the Monetary Policy Rate (MPR) by 200 basis points to 24.75 percent from 22.75 percent in February 2024.

In her second term message, Kristalina Georgieva, IMF managing director, who was recently reappointed by the executive board of the IMF, said, “I am deeply grateful for the trust and support of the Fund’s Executive Board, representing our 190 members, and honoured to continue to lead the IMF as managing director for a second five-year term.”

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PenCom recovers N12.45bn from erring employers

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The National Pension Commission (PenCom) said it has recovered N12.45 billion from employers that failed to contribute towards their employees retirement.

The recovery would indeed help in wealth creation for the workers, thereby securing them against old age poverty in retirement.

PenCom in its 4th quarter 2024 report, said it has maintained the services of Recovery Agents (RAs) for the recovery of unremitted pension contributions and penalties from defaulting employers.

It submitted that during the quarter, the sum of N319,468,587.45 comprising principal contributions N128,176,029.95 and penalties N191,292,557.50 was recovered from 32 defaulting employers.

It noted that meanwhile, the Commission Secretariat/Legal Advisory Services Department had been requested to take legal action against 4 defaulting employers.

The pension industry regulator maintained that from the commencement of the recovery exercise in June 2012 to 31 December 2023, a total sum of N25,447,085,186.71 comprising of principal contributions N12,929,415,445.52 and penalties N12,517,669,741.19 was recovered from defaulting employers.

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