Economy
CBN Faults JP Morgan’s $3.7bn Estimate of Nigeria’s Net Reserves
By Adedapo Adesanya
The Central Bank of Nigeria (CBN) has said the recent estimate of the country’s net external reserves by JP Morgan was “out of context”, and assured that there was no cause for panic.
Recall that Business Post earlier reported that the American investment bank said it estimated the value of Nigeria’s FX reserves at $3.7 billion against the $33.8 billion published by the apex bank.
Speaking on Money Line, a programme aired on Africa Independent Television (AIT), the Director of the Monetary Policy Department of CBN, Mr Hassan Mahmud, on Wednesday, said that fluctuations and liabilities encumbrances to the reserves were only natural and normal, adding that the apex bank built the reserves to defend the naira in terms of its value to other currencies.
He questioned the real intent of the report by the rating agency, saying, “Whether to rouse market sentiments, or whether to mislead the public?”
He stressed that the apex bank had tried as much as possible to be transparent in its operations.
Mr Mahmud also disclosed that CBN owned about 80 per cent of funds in reserves mainly to support the local currency in periods of volatility as well as boost the confidence of foreign investors, among others.
He stated, “We also read the JP Morgan numbers in-house, and we didn’t panic over that. That’s not the first time we have seen people and institutions reeling out numbers; they must have their intentions to do that, whether to rouse market sentiments or to mislead the public.
“But, the central bank has, as much as possible, tried to be transparent. What I will say about those numbers is that it is just funny in the sense that number one, reserves like any account balance, is a flow; there are changes that go within it at any particular time.
“Two, even if you have outstanding liabilities, you don’t mark the outstanding liabilities to market on a day and say this is your net balance.
“I can have $20 million in my account, and I owe someone maybe $13 million that is supposed to be paid in 2027; you can’t come in 2023 and say if I remove that $13 million, your money is $7 million or you are having $7 million.
“Now, I am not having $7 million; I am having $20 million. Because before I took a facility of $13 million, I know in the next three years, I will get $17 million, so I can pay you back.”
Mr Mahmud added, “But for you to come and tell me that no, your balance is $7 million and you can’t pay back in three years; it’s just putting it out of context.
“Yes, there are liabilities encumbrances to the reserves, which is normal. The CBN built the reserves to defend the naira in terms of its value to other currencies, and close to 80 per cent of the reserves is CBN’s funds.”
The CBN director also said, “When the federal government or the oil export receipts come to Nigeria, it comes through the central bank. The CBN monetises that to naira, and the federal government spends the naira in the implementation of its budget.
“So, that dollar component sits with the central bank, and the purpose of the dollar component, one, is to build the confidence of the international community in the capability of the central bank to meet its trade commitment, and so you will see measurements around what months of imports either goods and services or goods only can your reserves cover?
“That gives some confidence to foreign investors trading with Nigerian investors in terms of import and export. Two, in the event that, for example, we have a float-managed exchange rate regime – in the event that the value of your currency is significantly depreciating or appreciating or whatever direction it is going – the central bank has the firepower to intervene in the market such that you bring the price to your expected or optimal equilibrium rate.”
Mr Mahmud further stated, “So, that is what the reserve is meant for – the reserve is not meant for just trading – in the event that there are also shortfalls in the build-up of those reserves, you can take a swap or other engagements that are legally allowed by the CBN Act over the short period of time.
“The exchange rate, like we mentioned several times, is also part of the tools to address price stability, including leading to inflation and all that.
“So, the reserves are tools we can comfortably use to build investors’ confidence in the Nigerian economy and also build the sovereign confidence in terms of our exposures to multilaterals the CBN is owing and service its debts.
“So, people do all those calculations. Okay, for example, we have some government loans that are for 10 years, and there is annual service interest that you are supposed to pay to amortise those loans.”
He stressed, “If you come today and sum up the entire facility, maybe $20 billion, and you say the federal government owes $20 billion for the past 10 years; if you remove that $20 billion from the $33 billion, you have only N3 billion to service your debt, that’s wrong because there’s going to be inflows; the federal government is going to earn some monies.
“I don’t know how they did their calculations, and I don’t have any information about that, but we also saw those numbers that came out.”
By Adedapo Adesanya
Three bellwether stocks lifted the NASD Over-the-Counter (OTC) Securities Exchange by 0.62 per cent on Friday, December 12 with the NASD Unlisted Security Index (NSI) jumping by 22.20 points to 3,600.43 points from 3,578.23 points.
In the same vein, the market capitalisation of the trading platform increased by N13.28 billion to close at N2.154 trillion from the previous day’s N2.140 trillion.
During the session, Central Securities Clearing System (CSCS) Plc went up by N2.53 to close at N39.71 per share compared with the previous day’s N37.18 per share, Geo-Fluids Plc added 35 Kobo to its price to finish at N5.00 per unit versus Thursday’s closing price of N4.65 per unit, and FrieslandCampina Wamco Nigeria Plc appreciated by 23 Kobo appreciation to sell at N60.23 per share versus N60.00 per share.
It was observed that yesterday, the price of Golden Capital Plc went down by N1.05 to N9.45 per unit from N10.50 per unit, and UBN Propertiy Plc declined by 21 Kobo to N2.01 per share from the N2.22 per share it was traded a day earlier.
There was a significant improvement in the level of activity for the day, as the volume of transactions increased by 6.2 per cent to 37.4 million units from the previous day’s 35.2 million units, the value of trades went up by 265.1 per cent to N4.9 billion from N1.4 billion, and the number of deals soared by 13.80 per cent to 33 deals from 29 deals.
Infrastructure Credit Guarantee Company (InfraCredit) Plc ended the last trading day of this week as the most active stock by value on a year-to-date basis with 5.8 billion units valued at N16.4 billion, the second spot was taken by Okitipupa Plc with 178.9 million units traded for N9.5 billion, and third space was occupied by a new comer in MRS Oil Plc with 36.1 million units worth N4.9 billion.
InfraCredit Plc also finished the session as the most active stock by volume on a year-to-date basis with 5.8 billion units transacted for N16.4 billion, followed by Industrial and General Insurance (IGI) Plc with 1.2 billion units valued at N420.3 million, and Impresit Bakolori Plc with 537.0 million units sold for N524.9 million.
By Dipo Olowookere
The bullish run on the Nigerian Exchange (NGX) Limited continued on Friday with a further 1.00 per cent growth buoyed by gains recorded by Guinness Nigeria, Champion Breweries, and others.
Data showed that the consumer goods space expanded by 1.53 per cent during the last trading session of the week, as the insurance counter grew by 0.51 per cent, and the industrial goods sector marginally gained 0.01 per cent.
However, the banking index depreciated by 0.54 per cent due to a pocket of profit-taking, and the energy industry shrank by 0.09 per cent, while the commodity sector closed flat.
Guinness Nigeria gained 10.00 per cent to trade at N217.80, Morison Industries rose by 9.84 per cent to N4.69, Champion Breweries jumped by 9.69 per cent to N14.15, Austin Laz grew by 9.66 per cent to N2.27, and C&I Leasing appreciated by 9.62 per cent to N5.70.
Conversely, eTranzact lost 10.00 per cent to finish at N12.60, Chellarams slumped by 9.00 per cent to N13.20, Eunisell depleted by 9.89 per cent to N75.15, Africa Prudential moderated by 9.77 per cent to N12.00, and DAAR Communications decreased by 9.18 per cent to 89 Kobo.
The busiest stock on Friday was Access Holdings with 107.6 million units sold for N2.2 billion, Consolidated Hallmark traded 59.9 million units worth N245.8 million, Zenith Bank transacted 48.2 million units valued at N3.1 billion, Transcorp Power transacted 42.8 million units for N13.1 billion, and Champion Breweries exchanged 36.4 million units valued at N510.2 million.
At the close of business, a total of 602.8 million units worth N30.7 billion exchanged hands in 20,550 deals yesterday, in contrast to the 529.7 million units valued at N12.3 billion traded in 18,159 deals on Thursday, representing a surge in the trading volume, value, and number of deals by 13.80 per cent, 149.59 per cent, and 13.17 per cent apiece.
Business Post reports that the All-Share Index (ASI) soared during the session by 1,485.89 points to 149,436.48 points from 147,950.59 points and the market capitalisation moved up by N945 billion to N95.264 trillion from N94.319 trillion.
By Adedapo Adesanya
An intervention of the Central Bank of Nigeria (CBN) in the foreign exchange (FX) market eased the pressure on the Naira on Friday.
The apex bank sold forex to banks and other authorised dealers in the official window to defend the domestic currency, helping to calm the FX demand pressure, with the Nigerian currency appreciating against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) by 0.11 per cent or N1.57 to sell at N1,454.50/$1 compared with Thursday’s closing price of N1,456.07/$1.
Also, the domestic currency improved its value against the Pound Sterling in the official market yesterday by N3.95 to close at N1,946.15/£1 versus the previous day’s N1,950.11/£1 but lost 10 Kobo on the Euro to quote at N1,706.46/€1 compared with the N1,706.36/€1 it was exchanged a day earlier.
At the black market segment, the Nigerian Naira maintained stability against the Dollar during the session at N1,470/$1 and also traded flat at N1,463/$1 at the GTBank forex counter.
Despite the sigh of relief, demand pressures outweighed the robust supply from the CBN and inflow from offshore players looking to participate at the OMO bills auction.
Gross FX reserves increased for the twenty fifth consecutive week, growing by a strong $396.84 million week-on-week to $45.44 billion.
As for the cryptocurrency market, it was down on Friday as pressure remained after Federal Reserve chair Jerome Powell’s speech on Wednesday, which hinted at a possible rate cut pause in January. As a result, markets now expect only two rate cuts in 2026 instead of three.
However, Chicago Federal Reserve President Austan Goolsbee, who was against a December rate cut, said he expects more in 2026 than the current median projection.
Ethereum (ETH) slumped by 5.1 per cent to $3,090.61, Solana (SOL) declined by 4.5 per cent to $132.79, Cardano (ADA) depreciated by 3.8 per cent to $0.4103, and Dogecoin (DOGE) dropped 2.5 per cent to trade at $0.1373.
In addition, Bitcoin (BTC) lost 2.4 per cent to sell at $90,342.74, Litecoin (LTC) tumbled by 1.9 per cent to $81.86, Binance Coin (BNB) fell by 0.6 per cent to $886.93, and Ripple (XRP) slipped by 0.5 per cent to $2.02, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
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