By Dipo Olowookere
The foreign exchange (forex) policy of the Central Bank of Nigeria (CBN) has again come under criticism and this time, from a foreign investor.
Recall that recently, the CBN was hit hard by the Nigerian Economic Summit Group (NESG), saying the current FX policy of the banking sector regulator was making things difficult for the country rather than make them better. And for this, the CBN did not pity the group as it lambasted its leadership, casting aspersions on its credibility.
The NESG was not the first to slam the multiple exchange rates system of the local central bank as the International Monetary Fund (IMF) and the World Bank and others have also criticised the policy.
Even a former Governor of the CBN, Mr Charles Soludo, has advised the central bank under the leadership of Mr Godwin Emefiele, to scrap the multiple exchange rates system though the CBN has explained why it is maintaining the policy despite the criticisms.
At a virtual conference recently, a portfolio manager at Emerging Markets Investment Management Ltd, known as Duet Group/UK, Mr Erik Renander, said the apex bank’s stance on forex was making Nigeria unattractive to foreign investors.
The London-based fund manager, according to Bloomberg, invested in Nigeria in 2017 by purchasing treasury bills after the devaluation of the Naira, when rates jumped to more than 20 per cent.
However, in February 2020, he sold all his holdings of bills and equities and has vowed not to re-enter the local market until the currency situation gets better.
Twice this year, the CBN has devalued the local currency; from N306 per Dollar to N360 per Dollar and again from N360/$1 to N380/$1.
The Naira has not had it good this year because of a shortfall in the crude oil earnings as a result of coronavirus disease, which crashed prices at the global market to below $20 per barrel at a point in the year. Now, the price has been hovering around $40 per barrel.
But with the way things are going, Mr Renander believes the Nigerian currency will remain under pressure and have suggested that to attract foreign investors, local investors must take control of the market, especially the equities segment.
“You could be sitting in front of a great opportunity,” he said, noting that, “Generally, when the currency devalues, the local stock market goes up a lot.
“Maybe the Naira is going to go to N550 per Dollar, and the Nigerian stock market [All-Share Index] could go to 50,000 points; you could easily have a double.”
But for him and other offshore investors, he may not consider returning to the local market because “it’s hard for me to come into Nigeria when I just don’t have an idea when I am going to get my money out again and yields aren’t high enough to compensate for that risk.
“The forex policy of the Central Bank of Nigeria is really hurting the attractiveness of Nigeria in general, both in equity and fixed income,” Mr Renander declared.
In April 2020, Business Post reported that some foreign investors who could not take their funds back in Dollars were forced to re-invest in the local market, which caused more liquidity in the system, making rates and yields to drop to single-digit lows.
At the last treasury bills sale last week, the CBN sold the three-month bill at 1.10 per cent, while the one-year instrument was cut to 3.05 per cent from 3.34 per cent.
Business Post reports that apart from the official exchange rate window known as the interbank, where the Dollar sells for N380, there is the Investors and Exporters (I&E) segment, the Bureaux De Change (BDC) window and the black market.
Access Holdings Merges Sigma, FGPL for Formidable PFA Business
By Aduragbemi Omiyale
To create a formidable pension funds administration (PFA) business in Nigeria, Access Holdings Plc has merged its subsidiary, First Guarantee Pension Limited (FGPL), with Sigma Pensions Limited.
The marriage between the two PFAs was made possible after Access Holdings acquired an indirect equity stake in Sigma.
Recall that in October, the company announced that it was buying a stake in Sigma to revolutionise the PFA sector.
On Thursday, a court approved the merger between the firm and FGPL, giving room for the organisations to become one and offer innovative products to customers.
A notice signed by the group company secretary of Access Holdings, Mr Sunday Ekwochi, confirmed the development.
“Sequel to our announcement on October 25, 2022, Access Holdings Plc, trading as Access Corporation, today announces the completion of its acquisition of an indirect equity stake in Sigma and the merger of its subsidiary, FGPL, with Sigma.
“Following the sanction of the scheme of merger between Sigma and FGPL by the Federal High Court on December 1, 2022, FGPL has been dissolved without winding up, leaving Sigma as the surviving entity,” a part of the statement dated Friday, December 2, 2022.
“Following the successful completion of the merger, our plan is to leverage the synergies of these entities, as well as the corporation’s expansive distribution network, strong risk management culture and best-in-class governance standards to create a formidable pension funds administration business,” the group chief executive of Access Holdings, Mr Herbert Wigwe, stated.
FrieslandCampina Buoys Unlisted Securities Market by 1.11%
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange returned to the positive zone on Friday, December 2, as it appreciated by 1.11 per cent at the close of business.
This was driven by a gain in the stock price of FrieslandCampina Wamco Nigeria Plc. The company appreciated by N5.29 price to close at N66.63 per share versus the previous day’s price of N61.34 per share.
This outweighed the 1 Kobo loss recorded by UBN Property Plc during the session as the price of the property investment company went down to 91 Kobo per unit from the preceding session’s 92 Kobo.
When the market closed for the day, the total value of the unlisted securities market increased by N10.27 billion to N933.71 billion from N923.44 billion.
In the same vein, the NASD Unlisted Securities Index (NSI) stretched by 7.82 basis points to 710.58 basis points from the 702.76 basis points in the previous session.
During the session, there was a surge in the volume of securities by 140,993.7 per cent as investors exchanged 2.2 million units, in contrast to the previous day’s 14,508 units.
Likewise, the value of shares traded at the session ballooned by 1,526.6 per cent to N10.7 million from the N657,534.75 recorded a day earlier, while the number of deals improved by 400 per cent to 20 deals from four deals.
When the market closed for the day, AG Mortgage Bank Plc was the most traded stock by volume (year-to-date) with 2.3 billion units valued at N1.2 billion, Central Securities Clearing System (CSCS) Plc occupied second place with 687.8 million units worth N14.3 billion, while Lighthouse Financials Services Plc was in third place with 224.7 million units valued at N112.3 million.
Also, CSCS Plc ended the day as the most traded stock by value (year-to-date) by trading 687.8 million units worth N14.3 billion, VFD Group Plc was in second place with 29.1 billion units valued at N7.7 billion, and FrieslandCampina WAMCO Plc was in third place after selling 16.8 million units worth N1.9 billion.
Naira Sells N730/$1 in Black Market, N748/$1 at P2P, N445.33/$1 at I&E
By Adedapo Adesanya
Normalcy seems to have returned to the currency market in Nigeria as the Naira further appreciated against the United States Dollar at the various segments of the ecosystem.
In the Investors and Exporters (I&E) segment of the foreign exchange (forex) market, the Nigerian currency gained 50 Kobo or 0.11 per cent to quote at N445.33/$1, in contrast to Thursday’s rate of N445.83/$1.
It was observed that domestic currency withstood significant FX demand pressure during the trading session as forex traders completed transactions worth $159.02 million compared with the $99.50 million executed a day earlier, indicating a 59.1 per cent or $59.52 million increase in FX turnover.
Also, in the Peer-to-Peer (P2P) window, the local currency appreciated against the greenback by N14 or 1.8 per cent to trade at N748/$1 compared with the preceding day’s N762/$1.
In the same vein, the value of the Nigerian currency to its American counterpart improved by N10 yesterday to sell for N735/$1 against N745/$1 of the preceding trading session.
However, in the interbank segment, the Naira lost N3.19 against the Euro on Friday as it closed at N464.98/€1 versus Thursday’s exchange rate of N461.79/€1, and against the Pound Sterling, it depreciated by N7.66 to quote at N542.33/£1 compared with the previous day’s N534.67/£1.
Meanwhile, the cryptocurrency market rebounded yesterday as investors showed renewed interest in digital assets, causing the value of Dogecoin (DOGE) to rise by 2.6 per cent to $0.1016.
Further, Cardano (ADA) recorded a 1.8 per cent increase to sell at $0.3189, Ethereum (ETH) saw its value go up by 1.3 per cent to close at $1,289.56, and Solana (SOL) appreciated by 1.4 per cent to trade at $13.65.
In addition, Binance Coin (BNB) grew by 1.1 per cent to settle at $291.72, Litecoin (LTC) appreciated by 1.0 per cent to trade at $77.23, Ripple (XRP) made a 0.9 per cent rise to finish at $0.3924, and Bitcoin (BTC) rose by 0.5 per cent to $17,030.33.
However, the US Dollar Tether (USDT) and Binance USD (BUSD) closed flat at $1.00 on Friday.
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