Has Mission To Save The Naira Begun?

The government may have begun the resuscitation of the Naira as it recently lifted the suspension restricting 43 items from its official forex platform, Investors’, and Exporters’ window. The restriction which became effective as announced by the Central Bank of Nigeria in 2015 originally had 41 products, but later had two other items added.  The Governor of the Bank, Mr. Olayemi Cardoso, announced the lift last Thursday among other policy initiatives he promised to unveil to halt the downward slide of the Naira against other currencies, particularly the America Dollar and British Pounds Sterling. The uncontrolled freefalling of the local currency, occasioned by the decision of the government to harmonize the exchange rate due to arbitrage, and racketeering in the parallel market of the forex subsector made the decision inevitable. The Governor gave a hint of this reversal among other reforms he promised during his screening by the Nigeria Upper legislature. This restriction affected products like rice, margarine, palm oil, palm oil products, dairy products, poultry, tomatoes, wheelbarrows, cosmetics, steel products, including toothpicks to mention but few.  The objective of the lift according to the Circular released by the Bank is to boost liquidity in the foreign exchange market, promising to intervene from time to time to ensure that importers of these items have free and unhindered access to forex from the official window. The CBN Act 2007 stipulates that Naira is the only acceptable legal tender in the country, but the emerging trend in irrationality is the dollarization of the economy. The non-regulation of the dollar by the government as it is the case in some countries, particularly African countries, has increased the appetite and demand for the currency, preferring it as a store of value, over and above the local currency to perpetrate rent-seeking and arbitrage. The importers of the restricted items have had to approach the parallel market to source for the dollar, invariably creating a chaotic pressure on the Naira. This atmosphere apparently took a toll on the Naira.  Obnoxiously, in Lagos, Abuja and Port Harcourt, landlords, hoteliers, and proprietors of schools started charging and demanding payments in dollars and pounds sterling. Equally, attitudes of some politicians and operators in the economy, particularly, the parallel market operators have not helped the fate of the currency. The usage of foreign currencies during electioneering campaigns impacted heavily on the Naira. It was an inexcusable national security offence, punishable by law. Also, Nigerians’ huge appetite for foreign imported goods is offensive, exporting jobs to other nations, thereby depleting the scarce national foreign reserves. More so, Nigeria’s backward integration intention has not been matched with action. Factories have closed and more are closing with its attendant job losses. Poverty reigns unchecked in the country, youth unemployment at almost 40 percent, creating despondency and Ja’pa syndrome. Brain drain phenomenon is fast depleting the economy of its egg heads, and professionals are emigrating in droves in search of greener pastures. It is noteworthy and pleasing that the administration of President Tinubu has opted to arrest the drift, injecting fresh brains in key organs of government saddled with the responsibility of creating jobs and wealth. The CBN latest circular announcing this decision, TED/FEM/FPC/GEN01/010 stated that “importers of all 43 items previously restricted by the 2015 circular, and its addendums are now allowed to purchase foreign exchange from the official Investors and Exporters’ forex window. Prior to this decision, key stakeholders in the economy, the Manufacturers Association of Nigeria, Lagos Chamber of Commerce and Industries, Airline Operators Association of Nigeria among others had called for a review of the policy to allow for transparency in the subsector. What the CBN has done in the opinion of some concerned Nigerians is that the Bank has now decided to tow the process of policy normalization in tandem with the present administration’s philosophy. The suspended restriction is considered an anathema to extant trade policy. This is because the restricted items were not under any prohibition. That singular action they opined caused the distortion and chaos not only in the forex subsector, but the economy at large. This latest responsive action from the CBN Governor has been variously commended by sector stakeholders, but warned the Bank against suppressive tendencies, particularly, outside the I&E window. A seasoned Financial/Business publisher, Mr. Ewache Ajefu, commended Mr. Cardoso for taking the bull by the horn. He, however, urged the fiscal authority to also review existing laws impeding economic growth, and come up with friendly policies that will encourage and boost local production and wealth creation. He urged policy formulation, coordination, and collaboration, devoid of rancor, witnessed during the immediate past administration between the monetary and fiscal authorities.  He also welcomed the decision of the Governor to “pull back” the CBN from its developmental financing activities witnessed during the immediate past governor of the Bank. He urged Mr. Cardoso to live up to his words to streamline the relationship between the Bank and government. He suggested a more mutual and beneficial relationship, respecting each other’s mandate, but should endeavor to always play limited advisory role that is supportive of economic growth and development. Mr. Adisa Olatilewa, an agricultural entrepreneur, also welcomed the suspension of the restriction. He lamented how his businesses suffered while the restriction lasted. He advised current managers of the nation’s bank to restrict themselves to the mandate of the Bank, and shy away from direct involvement in fiscal development financing initiatives. He said his experience, and many others like him, during the last administration of President Buhari was distasteful. He wants the CBN as the banker to the government, and its advisor, to play the roles as constitutionally ascribed on policy measures, regulations, and programmes that will support economic development and welfare of Nigerians. He also wants the government to liaise with the CBN on measures to be taken to arrest the intractable inflation which in his opinion may jump to 26 percent if urgent measures are not taken. If the government works with the CBN, and the CBN is sincere

Naira Weakens Despite CBN’s Intervention

Since the unification of all the official foreign exchange (FX) windows, the Naira has continued to depreciate against the US dollar, down by 39.6 per cent to N765.83/$ as of 11 October 2023 from N462.88/$ at the I&E Window. Based on the half-year financial markets report of the Central Bank of Nigeria, it has maintained its intervention in the foreign exchange market in an attempt to alleviate demand pressures and ensure exchange rate stability. A total of $6,439.33 million was sold at the foreign exchange market made up of spot sales of $1,557.47 million and forward sales of $4,881.86 million. The spot sales comprised $612.41 million sold at the inter-bank Secondary Market Intervention Sales (SMIS) window, $455.31 million sold to Small and Medium Enterprises (SMEs), $441.75 million for Invisibles, and $48.00 million sold at the I&E window while the bank purchased a total of $655.53 million in the FX market. However, the shocks of the policy have been more pronounced at the parallel market leading to a steep depreciation of the Naira to N1020/US$ on 10 October 2023. With little control over the depreciation of the nation’s currency, the then acting governor of the Central Bank of Nigeria (CBN), Mr. Fola Shonubi, announced plans to put in place new policies that would guide the dealings of FX to boost supply in the market. Apparently, the measures put in place have not been effective as demand for FX continues to rise amidst an acute shortage of supply. “We have always argued that while we believe the unification of the various FX rates is a pro-market policy that will be positive for the economy in the long term, the short to medium-term impact will be hard too hard on the average consumer. “A focus on rate convergence without structural reforms to increase the supply of FX will be a case of treating the symptoms while ignoring the underlying cause of the problem which is an acute shortage of supply amidst a growing demand for FX. Meanwhile, while crude oil sales and Foreign Portfolio Investments (FPIs) are two major sources of FX that have declined significantly, Oil production remains depressed, reported at 1.57 mbpd in September (highest so far this year) and are yet to see any significant foreign capital inflows. According to the Nigerian National Petroleum Company Limited (NNPCL), between September 30 and October 6, 128 crude oil theft incidents were recorded across the oil-producing areas of the Niger Delta. In the specific timeframe mentioned, there were numerous illicit activities in the oil sector. These included 17 cases of unauthorized connections, 27 illegal refineries, 11 infractions related to vessel tracking systems (AIS), and 49 instances of wooden boat arrests.

Naira records 0.22% appreciation at Investors, Exporters Window

The Nigerian naira exhibited an upward trend against the US dollar on Thursday, trading at an exchange rate of N771.69 within the Investors and Exporters window. This marked a noteworthy appreciation of 0.22% when compared to the N773.42 rate observed on the preceding Wednesday. At the close of trading on Thursday, the open indicative rate concluded at N777.82 to the dollar, suggesting the local currency’s strengthening trajectory. The day’s trading unveiled a peak spot exchange rate of N799.90 to the dollar, ultimately stabilizing at the closing rate of N771.69. Conversely, the naira saw a lower point during the trading session, reaching an exchange rate as minimal as N700 to the dollar. The investors and exporters window experienced a trading volume totaling $121.60 million on Thursday, indicative of the market’s activity and significance in the foreign exchange landscape. This robust level of trading underscores the ongoing dynamics and engagement in the currency market. The appreciation of the naira against the dollar reflects the evolving economic landscape, where market forces interact to influence currency valuations. The day’s fluctuations, ranging from the highest recorded rate to the lowest, mirror the currency’s volatility in response to various market factors.

Naira appreciates 4.31% at investors, exporters window

On Friday, the Naira displayed a remarkable appreciation of 4.31% against the dollar at the Investors and Exporters window, reaching an exchange rate of N743.07. This significant gain was in contrast to the previous day’s rate of N776.50. The open indicative rate also closed favorably at N782.28 to the dollar on the same day. During the day’s trading, the spot exchange rate peaked at N799 to the dollar before ultimately settling at N743.07. Interestingly, the Naira was observed to have been sold as low as N475 to the dollar within the same trading session, indicating some fluctuations in the market. The Investors and Exporters window witnessed substantial activity, with a total of $121.08 million being traded on Friday. This volume of transactions reflects the ongoing dynamics in the foreign exchange market and the interests of investors and exporters in Nigeria’s currency market. The Naira’s gain at the Investors and Exporters window indicates some positive sentiment and demand for the local currency in recent trading activities. However, it is essential to keep an eye on market conditions and various economic factors that could influence future fluctuations in the exchange rate. As with any currency, the Naira’s value can be influenced by factors such as the country’s trade balance, foreign direct investments, foreign reserves, and government monetary policies. A stable and competitive exchange rate is crucial for the Nigerian economy to attract foreign investments, ensure price stability, and enhance international trade. Overall, market participants, investors, and policymakers will continue to closely monitor the Naira’s performance in the coming days to gauge the currency’s strength and stability in the face of economic challenges and global market trends.

Naira ends week in 0.93% loss against dollar

The Naira experienced a 0.93% loss against the dollar, ending the week at an exchange rate of N775.76 at the Investors and Exporters window. This decline was in comparison to the rate of N768.60 recorded on Thursday. The open indicative rate stood at N776.74 to the dollar on the same day. Throughout the trading session, the spot exchange rate fluctuated, with the highest recorded rate being N799.50 before settling at N775.76. Conversely, the Naira saw some low points, reaching N465 to the dollar during the day’s trading. Overall, a total of 54.18 million dollars was traded at the investors and exporters window on Friday, highlighting the continued activity in the foreign exchange market. The fluctuations in the Naira’s value against the dollar reflect the ongoing challenges in the currency’s stability and the broader economic landscape. Investors and traders closely monitored these developments to make informed decisions amidst the volatility in the exchange rates.

Equity market continues bullish run, gains N534bn

Nigeria’s equity market on Monday appreciated by N534 billion as an investment in the shares of United Bank of Africa, FCMB, Access Bank and others lifted the market activity The market capitalization of listed equities increased by 1.60 percent to N33.731 trillion from N33.197 trillion reported the previous day. The NGX All Share Index also increased by 980.97 basis points to 61949.24 points from 60968.27 points traded on Friday. A review of the investment during the day showed that JapaulGold, UPL, and Fidelity Bank led the gainers’ table gaining 10 percent each to close at N0.77 percent, N2.75, and N7.70 percent respectively, Meyer Paint and Eterna Plc also increased by 10 percent each to close at N23.10 per share. On the contrary, Triple G topped the losers’ chart during the day, shedding 9.87 percent to close at N3.38 percent each, Cornerstone Insurance and NSL Tech trailed with a loss of 9.09 percent each to close at N1.00 and N0.30 per unit respectively. ABC Transport fell by 6.82 percent to close at N0.41 per share, Julius Berger was down by 3.23 percent to close at N30.00 per share. Volume of trades increased by 20.692 million, representing 20.73 percent as investors traded 1.205 billion shares valued at N14.039 billion in 12128 deals against 998.080 million shares valued at N15.956 billion in 10580 deals. Transactions in the shares of FCMB group was the toast of investor during the account for 173.808 million shares valued at N930.697 million, United Bank for Africa followed with an account of 160.673 million shares worth N2.119 billion, Access Corp traded132.518 million shares valued at N2.383 billion, Jaiz Bank exchanged 80.637 million shares worth N138.392 million while Transnational Corporation of Nigeria Plc sold a total of 74.963 million shares cost N285.247 million.