CBN Extends Naira for Dollar Promo Deadline
By Dipo Olowookere
The deadline for the promo introduced by the Central Bank of Nigeria (CBN) to boost diaspora remittances in the country has been extended.
The initiative tagged Naira 4 Dollar allows beneficiaries of foreign fund transfers through any of the accredited International Money Transfer Operators (IMTOs) to earn N5 for every $1, which could be cashed out over-the-counter or transferred into the beneficiary’s bank account.
The promo started on March 8, 2021, and was supposed to end on May 8, 2021, but the apex bank has now extended the deadline indefinitely.
In a circular issued by A.S. Jibrin for the Director of Trade and Exchange Department of the CBN, it was stated that the promo will continue till further notice.
“Further to the CBN circular referenced TED/FEM/PUB/FPC/01/003 dated March 5, 2021, on the above subject matter, we hereby announce the continuation of the scheme until further notice.
“All aspects of the operationalization of the programme remain the same.
“Please take note and ensure compliance,” the circular stated.
Business Post reports that the CBN introduced the Naira for Dollar promo to increase the flow of Dollars into the country, especially at a time the country was experiencing a shortage in FX earnings from crude oil sales.
The apex bank had said the promo would help Nigeria “to make the process of sending remittance through formal bank channels cheaper and more convenient for Nigerians in the diaspora.”
It had also said the scheme would “ensure that remittance flows and diaspora investments become a significant source of external financing” for the nation.
The Governor of the CBN, Mr Godwin Emefiele, had explained that the models had been applied in Pakistan and Bangladesh. He said both South Asian countries had introduced reimbursement schemes to support inflows.
In the CBN chief’s words, “In Pakistan, the scheme, which is known as free send, has enabled record amount of inflows of over $2 billion a month even during the COVID-19 pandemic.
“Bangladesh introduced its own scheme in June 2019, which is a two per cent rebate on remittance inflows. Following this action, they have also seen a 20 per cent boost in remittance inflows.”
A respected Economist, Mr Bismarck Rewane, while speaking on the likely implications of the currency promo during a chat with Business Morning on Channels TV in March, said it was designed to increase the country’s awareness and the inflows of Nigeria’s diaspora into the country’s financial system.
However, he noted that it was rare for the government to use such promotional schemes to promote inflows into the country.
“What is challenging here is that it is very unusual for policies to be tied around promos or gimmicks. Usually, promos and gimmicks are used by manufacturers to launch or push products, or airlines when they have low sales.
“So, they tie this kind of promo to buy one get one free or to revamp stagnant sales. So, it’s very unusual and peculiar for governments to engage in gimmicks or promos,” he noted.
But he warned that there are a lot of risks associated with the policy because some people will round trip the policy using arbitrage. Arbitrage is the simultaneous purchase and sale of the same asset in different markets in order to profit from tiny differences in the asset’s listed price.
“So, people will try to use arbitrage on the system. But the fact is that Nigeria is number six in the world in terms of diaspora and workers remittances. It is estimated at about $20 to $25 billion [annually].
“The current pandemic and unemployment rates in the US, Canada, the European Union and the United Kingdom are also going to affect the ability of Nigeria to remit money in.
“These two trends have actually dropped sharply because of vaccination certificates and all sorts of the pandemic effect. So, basically, in the end, I think it’s a gimmick. It is a promo, the central bank will fully understand in the end that there’s no other way of managing an exchange rate than converging them, having one rate so that people don’t stop exploiting it.
“In any case, you collect cash, and you take it to the parallel market or autonomous sources to sell the Naira, and then come back and you get the N5. What could happen is that you could turn $1,000 back again to your brother, who will bring it back.
“So, what could happen is that there could be what I call playing with neurons, the same money turning around the velocity of separation increasing, whilst the quantity supplied into the market will not increase.
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NDEP Pulls Down Unlisted Stock Exchange by 0.08%
By Adedapo Adesanya
Niger Delta Exploration and Production (NDEP) Plc sank the NASD Over-the-Counter (OTC) Securities Exchange by 0.08 per cent on Thursday, June 1, rubbing off the gains posted by three other stocks on the platform.
The share price of NDEP Plc went down by N9.09 to N245.05 per unit from the N254.14 per unit it closed a day earlier.
As earlier stated, it suppressed the growth printed by the trio of FrieslandCampina Wamco Nigeria Plc, Central Securities Clearing System (CSCS) Plc, and Acorn Petroleum Plc.
FrieslandCampina Wamco Nigeria Plc grew by 20 Kobo to N70.20 per share from the previous session’s N70.00 per share, CSCS Plc added 8 Kobo to close at N14.00 per unit versus Wednesday’s value of N14.08 per unit, and Acorn Petroleum Plc gained 1 Kobo to close at 14 Kobo per unit versus 13 Kobo per unit.
At the close of business, the market capitalisation of the unlisted stock exchange fell by N840 million to N1.007 trillion from N1.008 trillion, while the NASD Unlisted Securities Index (NSI) depreciated by 0.61 points to 728.37 points from 728.98 points.
At the close of transactions yesterday, investors traded a total of 1.0 million units of securities, in contrast to the 5.4 million units of securities transacted in the preceding session, indicating a slump of 80.7 per cent.
However, the value of shares exchanged by the market participants went up by 194.3 per cent to N189.5 million from N64.4 million, as the number of deals declined by 16.7 per cent to 15 deals from 18 deals.
Geo-Fluids Plc closed as the most traded stock by volume (year-to-date) for selling 832.1 million units valued at N1.3 billion, followed by Industrial and General Insurance (IGI) Plc with 627.7 units worth N49.4 million, and UBN Property Plc with 395.9 million units valued at N336.6 million.
Also, VFD Group Plc was the most traded stock by value (year-to-date) for exchanging 10.7 million units valued at N2.4 billion, trailed by Geo-Fluids Plc with 832.1 million units worth N1.3 billion, and FrieslandCampina Wamco Nigeria Plc with 17.1 million units valued at N1.2 billion.
Crude Oil Jumps as US Reps Pass Contested Debt Bill
By Adedapo Adesanya
Crude oil increased on Thursday as the US House of Representatives’ passage of a bill to suspend the debt ceiling helped to offset the impact of rising inventories in the country.
Brent jumped by 2.3 per cent or $1.68 to $74.28 per barrel, as the US West Texas Intermediate (WTI) expanded by 3 per cent or $2.01 to settle at $70.10 a barrel.
Both benchmarks recovered from two-straight sessions of losses after the House passed a bill late on Wednesday to suspend the US government’s debt ceiling and improve chances of averting a default.
The Republican-controlled House voted 314-117 to send the legislation to the Senate, which must enact the measure and get it to President Joe Biden’s desk before a Monday deadline when the federal government is expected to run out of money to pay its bills.
The legislation temporarily removes – the US federal government’s borrowing limit through January 1, 2025.
The timeline will allow President Biden and Congress to set aside the politically risky issue until after the November 2024 presidential election.
It would also cap some government spending over the next two years, speed up the permitting process for certain energy projects, claw back unused COVID-19 funds and expand work requirements for food aid programs to additional recipients.
With this good as done, the market’s focus has also shifted to a June 4 meeting of the Organisation of the Petroleum Exporting Countries and its allies, including Russia, collectively called OPEC+.
According to Reuters, sources noted that the alliance is unlikely to deepen supply cuts at the Sunday meeting, but some analysts maintained that it is a possibility as demand indicators from China and the US have been disappointing in recent weeks.
Pressure came as US crude oil stockpiles rose unexpectedly last week, as imports jumped and strategic reserves dropped to their lowest since September 1983.
According to data from the Energy Information Administration (EIA), an inventory build of 4.5 million barrels was reported for the week to May 26.
At 459.7 million barrels, crude oil inventories in the U.S. are around 2 per cent below the five-year average for this time of the year.
The market will also be looking at the next moves by the US Federal Reserve and what it would do concerning its interest rates.
Naira Crumbles at Parallel Market After CBN Devaluation Denial
By Adedapo Adesanya
The Naira tumbled against the Dollar in the parallel market on Thursday after the Central Bank of Nigeria (CBN) refuted reports that it had devalued the local currency to N630/$1 in the official market.
The central bank described the news report as fake news, urging members of the public to disregard it as it had not authorised such.
This affected the value of the Nigerian currency on the streets yesterday as it lost N10 against the US Dollar to close at N750/$1 compared with Wednesday’s value of N740/$1.
In the official segment, which is also the Investors and Exporters (I&E), the domestic currency traded flat against the greenback during the session at N464.67/$1 despite the value of foreign exchange (forex) transactions rising by 53.3 per cent or $87.24 million to $250.98 million from $163.74 million.
In the Peer-2-Peer (P2P) segment, the local currency appreciated against its American counterpart by N9 to trade at N755/$1 versus the preceding day’s rate of N764/$1.
The Naira closed flat against the Pound Sterling on Thursday at N574.37/£1 but appreciated against the Euro by N2.31 to close at N493.58/€1 compared with the midweek session’s N495.89/€1.
In the cryptocurrency market, there was a renewed interest as optimism was injected into the assets, with top coins tracked by Business Post performing well.
Bitcoin (BTC) appreciated by 1.3 per cent to $27,201.31, Ethereum (ETH) improved its value by 2.0 per cent to $1,894.80, Litecoin (LTC) went up by 4.1 per cent to trade at $95.39, Ripple (XRP) recorded a 2.3 per cent gain to quote at $0.5193, and Cardano (ADA) appreciated by 2.2 per cent to trade at $0.3733.
Further, Solana (SOL) made a 2.1 per cent rise to sell at $21.12, Binance Coin (BNB) jumped by 1.2 per cent to sell for $308.33, and Dogecoin (DOGE) added 0.6 per cent to sell at $0.0722, while, the US Dollar Tether (USDT) and Binance USD (BUSD) remained unchanged at $1.00 each.
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