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Naira holds N1,500/$ line amid EFCC clampdown

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The naira held its ground on the unofficial market, appreciating against the dollar on the parallel market as the dollar index posted some losses amid profit-taking.

The value of the naira was N1,500 on Friday, compared to N1,510/$1 on Thursday on the black market.

The naira settled at N1,482.8 on Friday, up from N1,485.7 on Thursday in the Nigerian Autonomous Foreign Exchange Market (NAFEM).

The Economic and Financial Crimes Commission (EFCC) has increased its efforts by adopting stronger new laws on Bureau de Change (BDC) and foreign exchange transactions on the black market to combat speculation against the weak naira.

EFCC agents recently arrested illegal currency traders in Abuja, Lagos, Kano, and Port Harcourt as part of their ongoing crackdown on street trading. The EFCC has already frozen more than 300 accounts connected to illegal foreign exchange trading.

The country’s financial watchdog, the Securities and Exchange Commission (SEC), also plans to work with the EFCC to mitigate forex trading manipulations within the digital space. According to CBN head of risk management, Blaise Ijebor, foreign exchange trading on the street is prohibited.

The CBN significantly increased the capital requirements for the nation’s BDCs, citing the need to regulate the sector and ensure that it isn’t undermining the value of the naira.

The apex bank increased the capital requirements for tier one BDCs operating nationwide from N35 million to N2 billion, while tier two BDCs operating in a single state saw an increase from N35 million to N500 million. The sector has six months to comply.

The umbrella group of the BDCs has requested a delay and a reduction in the new thresholds from the authorities.

This action follows the Federal Government’s announcement of plans to outlaw the trading of cryptocurrencies between individuals in naira as part of a larger crackdown on cryptocurrency platforms, which they claim is exacerbating the volatility of the local currency.

The naira has lost more than two-thirds of its value to the dollar since last year’s liberalisation of Nigeria’s FX market.

The haven currency declined against major currencies on Friday as investors booked profits following recent gains, but the US currency was still in a solid position to rise further due to encouraging U.S. economic data that caused markets to reduce their expectations for interest rate reductions.

Data released on Friday showed shipments and new orders for important capital goods made in the United States surged in April, surpassing expectations and pointing to a possible increase in business equipment spending in the first part of the second quarter.

This followed statistics released on Thursday revealing that U.S. manufacturers were reporting rising input prices and that U.S. business activity in May increased to the highest level in just over two years.

This week’s release of the minutes from the Federal Reserve’s most recent meeting revealed a heated discussion among decision-makers about whether the current interest rates were tight enough to curb inflation.

Following five straight trading sessions of gains, the dollar index saw a 0.3 percent decline on Friday, closing at 104 index points against a basket of major currencies. However, the dollar index increased by 0.2 percent for the entire week.

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Money market

Naira slumps marginally at official, parallel windows

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The naira slumped marginally against the United States dollar on Friday. Data from the Nigerian Autonomous Foreign Exchange Market (NAFEM) showed that the domestic currency traded at N1, 485.53/$1 on Friday.

At the end of trading today, the naira lost less than N1 against the dollar as against the N1,485.36/$1 it recorded on Thursday.

The intra-day high and low recorded during the day were N1, 505/$1 and N1, 401/$1 respectively, representing a very lean spread of N104\$1.

Similarly, the naira slumped against the dollar at the parallel section of the market to trade at N1,495/$1, as against the N1,490/$1 it traded the previous trading day.

However, the Nigerian currency appreciated slightly against the British Pound to trade at N1,890\£1 s against the previous trading day’s N1,900\£1. For several weeks consecutively, the Canadian dollar closed flat against the naira to trade at N1,200| CA$1.

The naira also lost N10 against the Euro to trade at N1,590/€1 as against the previous trading day’s N1,580/€1.

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Money market

CBN, OPS collaborate to boost Nigeria’s financial sector

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By Opeyemi Abdulsalam

The Central Bank of Nigeria (CBN) recently hosted a meeting with the Organised Private Sector (OPS) to discuss strategies for enhancing Nigeria’s financial sector.

The meeting aimed to improve monetary policy communication and guidance to boost Nigeria’s image in the global investment community.

CBN Governor, Mr. Olayemi Cardoso, emphasised the importance of private sector contributions to economic policy and pledged to establish a framework for collaboration and regular interactions with OPS leadership.

“The private sector is a critical engine of our economy. This meeting underscores our commitment to working collaboratively with stakeholders to create a more robust and investor-friendly financial environment,” Cardoso said.

The CBN presented an overview of the economy’s trajectory, highlighting the deceleration of inflation and expectations of moderation.

The Bank assured the private sector of its commitment to building trust, ensuring price stability, and implementing monetary policies to support economic growth and stability in foreign exchange rates.

The meeting also addressed concerns about macroeconomic risks, exchange rate volatility, and the need for development finance support.

The CBN and OPS agreed to work together to create a more robust and investor-friendly financial environment.

“We appreciate the CBN’s open dialogue and interest in ensuring the manufacturing industry and other organised private sectors are abreast of the bank’s policies,” said Otunba Francis Meshioye, President of the Manufacturers Association of Nigeria (MAN).

The meeting demonstrated the CBN’s commitment to collaboration and its willingness to listen to the concerns of the private sector.

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Sterling Bank, SMEDAN partner on data platform, Databanc

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Sterling Bank and the Small and Medium Enterprises Development Agency of Nigeria have launched a platform called Databanc that provides data on businesses in Nigeria and N5bn worth of single-digit loan programmes.

A statement from the bank said that Databank provides insights which will be utilised by SMEDAN to deliver its mandate on policy formulation and a unique identification for small businesses and their promoters.

Speaking at the launch of the platform, the Executive Director of Commercial and Institutional Banking at Sterling Bank, Tunde Adeola, described the platform and fund as evidence of Sterling Bank’s commitment towards growing the real sector of the nation’s economy.

Adeola said, “We are delighted to bolster the backbone of our economy with SMEDAN. This initial fund of N5bn marks just the beginning of what has been and will continue to be a mainstay of our approach to funding businesses to grow at scale, and become the preferred financial partner for businesses, no matter their scale.”

He added that over 20,000 SMEs had enrolled on the Databanc platform, with over 80 beneficiaries of the single-digit loan programme and further disbursements ongoing.

He encouraged all MSMEs in the country to enrol on the platform.

SMEDAN’s Director-General, Mr Charles Odii, represented by the Director of Agribusiness Development and Access to Finance, Levi Anyikwa, highlighted the programme’s alignment with SMEDAN’s mission to democratise credit access for nano and micro-enterprises.

Anyikwa affirmed that access to finance remained a significant hurdle for SMEs, and restated SMEDAN’s commitment to removing that barrier.

The Head of SME Digital Products at Sterling Bank, Bolanle Tyson, emphasised Sterling Bank’s strategic focus on critical sectors encapsulated in the HEART of Sterling forward strategy: Health, Education, Agriculture, Renewable Energy, and Transportation.

She said, “We are leveraging data to empower SMEs like never before. Our commitment to SMEs is steadfast. We recognise their pivotal role in driving Nigeria’s GDP and employment. This partnership with SMEDAN underscores our shared dedication to their success.”

The latest study from Visa, the SME Megatrends report showed that SMEs in Nigeria remained heavily underserved and underbanked with a considerable amount of SMEs relying on personal loans and informal credit, as they face obstacles and requirements that make it difficult to secure loans from banks and other formal lending institutions.

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