Connect with us

Money market

Naira plummets to 1,089.51/$ on official market



The Nigerian Naira has continued to decline, reaching over N1,000 per dollar for the second time in 2024 on the official foreign exchange market.

According to data from the FMDQ Exchange, the Naira fell to 1,089.51/$ on Tuesday from 856.57/$ the previous day at the Nigerian Autonomous Foreign Exchange Market (NAFEM).

This follows a previous instance on January 3, 2024, when the Naira closed at N1,035.12/$ at the NAFEM.The Naira had also experienced declines on December 8 and December 28, 2023, reaching 1,099.05/$ and 1,043.09/$ respectively on the FX market. During Tuesday’s trading, the highest bid rate for the dollar was quoted at N1,251, while the lowest spot rate was at N720/$.

The daily FX market turnover saw a significant increase of 63.34 percent to $97.45 million compared to the previous day’s $59.66 million.The depreciation of the Naira can be attributed to various factors, including economic uncertainties, global market dynamics, and domestic fiscal challenges.

However, this decline raises concerns about its impact on households and the Nigerian economy as a whole. As the exchange rate worsens, the cost of imported goods rises, potentially leading to increased inflation and affecting the purchasing power of households..

This downturn in the naira’s value raises concerns about its implications for households and the Nigerian economy at large. As the exchange rate worsens, the cost of imported goods rises, potentially leading to increased inflation and impacting the purchasing power of households.

Additionally, businesses may face challenges due to higher import costs, potentially hindering economic growth in the country. Authorities closely monitor the situation as efforts are made to address the root causes of the naira’s decline and stabilize the foreign exchange market.

In the latest monthly economic report released by the Central Bank of Nigeria (CBN), it has been revealed that the total foreign exchange (FX) inflow into the Nigerian economy experienced a notable 10 percent month-on-month increase, reaching USD5.7 billion in August 2023.

This upswing in FX inflow is chiefly attributed to a substantial 17 percent quarter-on-quarter surge in FX revenues from autonomous sources, amounting to $3.3 billion. Conversely, the FX inflow through the CBN, constituting 43 percent of the total FX inflows, witnessed a modest -6 percent month-on-month decline, settling at $2.4 billion in August 2023.

The year-on-year perspective indicates a significant -19 percent decline in FX inflow into the economy, dropping to $5.7 billion in August 2023. The contrasting dynamics between the monthly and yearly figures underscore the complexities influencing the foreign exchange landscape.

Analysts posit that the surge in autonomous FX revenues could indicate increased economic activities or diverse sources of foreign exchange inflows. On the other hand, the dip in CBN-mediated inflows might result from various factors, potentially warranting a closer examination of the central bank’s policies and market dynamics.

As stakeholders assess the implications of these trends, attention is drawn to the need for a comprehensive understanding of the factors driving the ebb and flow of foreign exchange into the Nigerian economy, signalling potential areas for policy adjustments and strategic interventions.

Money market

LCCI advocates discipline, export to sustain Naira appreciation



LCCI advocates discipline, export to sustain Naira appreciationThe Lagos Chamber of Commerce and Industry (LCCI) has emphasised the importance of maintaining discipline in the foreign exchange market to sustain the steady appreciation of the Naira.

The President and Chairman of the Council of LCCI, Mr Gabriel Idahosa, made the call in an interview with newsmen on Wednesday in Lagos.

Idahosa praised the efforts of the Central Bank of Nigeria in imposing discipline, attributing the recent Naira appreciation to curbing speculative activities.

“On the monetary side, the CBN is doing it. The primary efforts should continue to impose discipline in the foreign currency market.

“The abuses in the foreign currency market were prevalent and most of the fall in the value of the Naira in the last six months is not because there was any sudden calamity in the Nigerian economy.

“It was primarily because of very reckless speculations, that people were just speculating in the dollar, they had nothing to export, nothing to import, they were just buying the dollar for speculative reasons.

“And once the Central Bank started to impose discipline in the foreign currency market, we saw the value of the Naira rising very quickly by stopping speculation,” he said.

According to him, the strategies of the Central Bank, now, are designed to achieve a sustained discipline in the foreign currency market.

Idahosa highlighted the need to continue reducing the number of Bureau de Change operators, stressing that many operated without contributing to international trade.

He applauded the Central Bank’s move to enforce documentation and identification of buyers and sellers at BDCs, aiming to deter reckless speculation and curb illicit financial flows.

On the fiscal side, Idahosa urged President Bola Tinubu to prioritise a nationwide export drive, citing it as the key to bolstering the Naira and providing essential foreign exchange.

He emphasised the importance of fostering a culture of export among Nigerians across all scales of enterprise to reduce reliance on imports and strengthen the country’s economic resilience.

Continue Reading

Money market

Foreign reserves decline to $32.29bn



The foreign reserve has depleted to $32.29 billion, which is a six-year low in the Central Bank’s course to save the naira.

This is the lowest level the reserves have been since September 25, 2017, when it was $32.28 billion.

The country’s foreign reserves declined by 6.2 percent, losing $2.6 billion since March 18, when the naira started its rebound from record-low levels against the dollar to $32.29 billion as of Monday, based on the latest available data from the CBN.

At the beginning of the month, the reserve was at $33.57 billion, then further dipped to $32.6 billion by April 12.

This comes as the CBN has attempted to save the naira through various interventions such as raising interest rates to 24.75 percent and managing foreign exchange trades.

It stepped up its intervention in the FX market with sales at both the official market and to BDC operators who sell dollars on the streets.

The apex bank, which sells $10,000 to each BDC every week, mandated them to only sell at a spread of 1.5 percent, which comes to N1,117 per US dollar.

The rate sold by the BDCs has set a defacto floor for the naira in the black market since the apex bank resumed sales to them in February.

Also, last month the CBN said it had cleared a backlog of $7 billion since the beginning of the year. That was built over the years as the central bank pegged its currency against the dollar, leading to a scarcity of foreign currency that deterred foreign portfolio investment. However, it’s unclear how much dollar debt the CBN retains on its books.

Akpan Ekpo, a professor of economics and public policy, said the CBN’s managed float system in which it is trying to ensure supply and curtail demand is not sustainable in the long term.

He said the CBN needs to be careful with how it depletes the foreign reserves as its main source is oil revenue.

“We need to manufacture non-oil goods and services, export them, and get foreign exchange and not depend on oil income,” he said.

Continue Reading

Money market

CBN expresses commitment to harnessing digital technologies



The Central Bank of Nigeria says it is committed to harnessing the power of digital technologies to enhance financial inclusion.

CBN Governor, Mr Yemi Cardoso said this on Tuesday in Abuja, during a strategic institutions tour by participants of Senior Executive Course 46 of the National Institute of Policy and Strategic Studies (NIPSS).

Cardoso, who was represented by Dr Bala Bello, Deputy Governor, Corporate Services, said that digital technologies would also boost productivity and create an enabling environment for innovation and entrepreneurship to thrive.

According to him, the apex bank has already deployed robust digital technologies in driving most of its processes towards achieving optimal performance.

He said that NIPSS, as a foremost national policy think-tank, had made invaluable contributions to the socio-political and macroeconomic development of Nigeria.

“We are, therefore, not surprised at the apt and relevant choice of your research theme.

“The CBN and NIPSS have had a long-standing and robust working relationship since the establishment of the institute. This has culminated into positive mutual benefits for the two institutions.

“The CBN, on the one hand, has provided infrastructural support to the institute through construction of an auditorium and a hostel, in addition to the provision of technical support.

“On the other hand, NIPSS has supported the technical capacity of the CBN through the training of some personnel both at senior executive course level and intermediate course cadre,” he said.

The Director-General of NIPSS, Prof. Ayo Omotayo, said that the study visiting would be representing the institute in getting information from operators of the apex bank on the relevance of digital technology to developing jobs for Nigerian youths.

According to Omotayo, a lot of progress has been made globally in using digital systems to run the economy.

“The more of our activities that we can put in digital format, the more we get the opportunity of providing employment access to a whole lot of the 120 million active Nigerians.

“We at NIPSS always knock at the frontiers of knowledge, checking what is going to happen in the immediate future.

“We are working towards a system where we believe that almost every service can be delivered digitally,” he said.

The Acting Director, Monetary Policy Department of the CBN, Dr Lafi Bala Keffi, commended the NIPSS study group for its interest in the apex bank.

She urged the participants to explore the time-tested culture of NIPSS, which is to diagnose national, profer practical solutions and recommend ways of making such solutions realisable.

Continue Reading