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Confusion as Naira Falls to N373 to Dollar

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The foreign exchange market swung left and right yesterday, forcing the Naira to drop to a new low in both the official and parallel markets, exchanging at N292.90 and N373 to the dollar respectively at both markets.

The local currency however closed at 292.90 to the dollar on the interbank rate after just one transaction was carried out, with dollar supply drying up and no intervention by the CBN, traders said.

The Nation reported that traders had expected the CBN to intervene to ease dollar shortages, but that did not materialise.

The naira’s free fall surprised many stakeholders, whose thinking is that the new flexible forex policy introduced by the Central Bank of Nigeria (CBN) would stabilise the currency.

Aminu Gwadabe, president, Bureau De Change Operators of Nigeria (ABCON), said commercial banks were playing big in the parallel market, manipulating naira rates against the greenback.

He told The Nation that most lenders keep two books – one for the official rate and the other for dispensing dollar in the parallel market.

“Demand at the parallel market is rising seriously. The banks are now playing big in the parallel market and there is basically no operating rules in the market. It is a market of who is who controlled by the banks,” he said.

The BDC chief said CBN Governor Godwin Emefiele should call an emergency meeting of all stakeholders on the fate of the local currency. To him, this is the only way out because “things are getting out of hand” as the market liquidity has dropped.

Nigeria has been grappling with a currency crisis since crude oil prices dropped by about 43 per cent from an average of $100.35 throughout 2014 to an average of $57.20 for the first six months of last year. It is now around $48.09 per barrel.

Specifically, the drastic fall in the price of crude oil, which constitutes the largest component of Nigeria’s forex reserves, has cut dollar earnings from about $3.2 billion monthly to about a billion dollar for the same period. This has negatively impacted on the value of the naira.

The woes of the naira will worsen in the coming months, with the local currency expected to exchange for N390 to the dollar at the close of the year, a report by Renaissance Capital (RenCap), an international investment and research firm, said.

Currency traders introduced a maximum resale premium on dollar trades to try to boost liquidity while investors have welcomed the removal of currency controls but many are still steering clear until the economy shows signs of a concrete recovery.

“Most investors would like to see a more liquid forex market before resuming purchases of local assets,” said Samir Gadio, head of Africa strategy at Standard Chartered Bank.

“Given the significant discount of naira-settled futures, a number of offshore financial institutions and hedge funds could be tempted to get involved in the foreseeable future.”


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E-Financial

Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme

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“Ounje Eko”, the food price discount initiative of the Lagos State Government, has appointed leading payment service bank, MoneyMaster Payment Service Bank Limited (MMPSB), as its collaborator in the bid to ensure ease of payments at the market.

MoneyMaster is one of the Central Bank of Nigeria-licensed Payment Service Banks (PSBs) to promote financial inclusion across Nigeria.

Under the partnership, MMPSB will apply its cutting-edge payment solution to engender easy payment and reconciliation in order to make   the experiences of Lagosians who will be getting their food supplies from the markets pleasurable. Its payment solution is also all-encompassing and ensures real time value to payment destinations.

The mobile bank was appointed as the collection and payment partner for “Ounje Eko” Food Markets programme which is a government initiative serving the five divisions of Lagos State. Consequent on this, MoneyMaster Payment Service Bank will collect payments in 57 LCDAs in the state.

The partnership gives credence to the quality of payment solutions that MoneyMaster is reputed for in its services to its growing business clientele in private and public sectors.

 


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E-Financial

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

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Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

The  inquiry follows an extensive audit by Deloitte, which scrutinized $7 billion in dollar debts accumulated under the bank’s previous leadership.

In the aftermath of the 294th Monetary Policy Committee meeting in Abuja, Yemi Cardoso, governor of CBN,  disclosed to journalists that the investigation, supported by the Economic and Financial Crimes Commission, among other security bodies, aims to clarify the legitimacy of these FX allocations identified as problematic by the audit.

“It was determined that a number of these transactions did not qualify…they were outright illegal. The law enforcement agencies are now looking into those transactions that as far as we are concerned, are not valid to be paid,” Cardoso detailed, emphasizing the unlawful nature of these forex deals.

The crux of the investigation lies in the audit findings that a significant portion of the scrutinized transactions lacked proper documentation and, in many instances, were deemed outright illegal.

However, the unfolding investigation has raised concerns within the organized private sector, with some entities contemplating legal action against commercial banks for unresolved forex bids.

Despite these tensions, Governor Cardoso reassures that the foreign exchange market remains open and transparent, inviting stakeholders to address their forex needs through the official channels.

Furthermore, Cardoso clarified the distribution of fertilizers to farmers as a one-off measure and not indicative of a shift back to direct interventions by the CBN, underscoring a commitment to strategic, regulatory governance rather than direct market involvement.

 

 

 

 

 

 

 

 


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CBN Urges Banks to Expedite Action on Recapitalisation

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Central Bank of Nigeria (CBN) has directed deposit money banks in the country to expedite action to increase their capital base from the current ₦25bn.

CBN Urges Banks to Expedite Action on Recapitalisation

Olayemi Cardoso, governor of CBN

Olayemi Cardoso, governor of CBN, stated this during the apex bank’s 294th meeting of the Monetary Policy Committee (MPC) on Tuesday in Abuja, when the MPC hiked the interest rate by 22.75% to 24.75%.

The apex bank chief said the MPC examined developments in the banking sector and expressed satisfaction that the industry remained stable. The committee, however, said to guard against risk, commercial banks in the country should accelerate their recapitalisation efforts.

Cardoso said, “The MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable. The committee thus called on the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.

“The MPC also enjoined the banks to expedite actions on the recapitalisation of banks to strengthen the system against potential risks in an increasingly globalised world.”

 

 

 

 


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