Economy
Currency Swap Deal: CBN Lacks Transparency—Vitafoam Boss
By Dipo Olowookere
Managing Director of Vitafoam Nigeria Plc, Mr Taiwo Adeniyi, has accused the Central Bank of Nigeria (CBN) of not being transparent in its dealings with stakeholders in the industry.
Mr Adeniyi was quoted by Daily Sun as saying that the apex bank sometimes shows partiality when carrying out its policies.
He was reacting to the announcement made by the CBN Governor, Mr Godwin Emefiele, of the bank’s readiness to buy Commercial Paper (CP) from large companies in order to lend to them at single digit interest rate.
According to Daily Sun, some companies were still waiting for the policy document from the CBN on this.
When asked for his opinion of the issue, the Vitafoam chief said, “When they (CBN) are taking such decisions, they have certain companies they are working with. So, they know what they are doing. When they are taking such decisions they know which organizations can issue commercial paper.
“They know the people they want to use it to help. Even the Yuan they are talking about; has it started? Is it operational?
“The news has gone all over the world that we are doing currency swap. Who and who are benefiting from it? They should tell us.
“Even the commercial banks that know how to operate it, you will hear them say they are still waiting for CBN.
“And yet, it is in the news that they have started the currency swap. So, when they are taking decisions, they know the companies they are targeting to help. So they just push it under the guise of every one of us,” Mr Adeniyi was quoted as saying.
But reacting to the allegation of being biased and not transparent, spokesman of the central bank, Mr Isaac Okorafor, when he contacted by Business Post, said the apex bank has always been plain in its operations.
“Which aspect of the deal (currency swap) does he feel we are not transparent? Is it in the amount of the deal or the rate or the trading?
“On the former, anyone doubting us can crosscheck with the PBoC. On the latter, trading is open and transparent and dealers are allowed to quote whatever they like.
“However as in the rules of the market, anyone who makes an unreasonable quote will be punished by the extent of his or her deviation from the rate that we feel should clear the market.
“It is done to ensure that speculation is put at bare. We have just started this process and with time, we will perfect it,” Mr Okorafor told Business Post in a text message.
Also commenting on the intention of the CBN to buy CP from firm, Managing Director of Afrinvest Securities Limited, Mr Ayodeji Ebo, said the development was a form of quantitative easing and advised the apex bank to come up with structures that will make SMEs participate in it.
“This is a form of quantitative easing. The only reservation is that this will be mainly enjoyed by the blue chip companies due to the SMES inability to issue Commercial Paper. The CBN may need to come up with structures that will enable the SMEs take part in the quantitative easing as this segment is more critical to the growth of the economy,” he said.
The CBN Governor had said at the end of the last Monetary Policy Committee (MPC) meeting in Abuja that the apex bank would buy commercial paper from large companies to lend to them at single digit interest rate.
“The MPC deliberated extensively on what can be done to encourage banks to lend to the private sector because of the numbers we looked at during the main meeting. The MPC was concerned that credit to the real sector was sliding and there was need to incentivise the banks to lend to the private sector.
“At this meeting, we saw improvement which was gratifying, but we feel we must still do what we want to do. In order to achieve lowering interest rate especially to agriculture and manufacturing sectors, we will encourage large corporates to issue CP into the market. In order to complement the banks, we expect that the CP will come in single-digit of 9 percent or below 10 percent, and for a long tenor, as high as five years or seven years, with a two-year moratorium, and for specific purposes.
“If the CBN sees those kinds of notes in the market, we will complement the efforts of the banks through any mechanism to support that by lending to that corporate at that single-digit rate. It is not meant to be in competition with the banks, it is meant to complement their efforts. We want to see that our objective to see to it that we achieve lower interest rate of a single digit can come through this means.
“If a bank lends such money for new projects or plant expansion and it is verifiable, not for refinancing, a project for seven years inclusive of two years moratorium at 9 percent. That bank providing those evidence and verified by the CBN, we will go into bank’s Cash Reserve Ratio and we will release cash of the equivalent sum to that bank at zero cost. In which case, that bank will earn its spread of 9 per cent of that money.
“We feel this is novel. It is something that we should give a chance. In the past, we had reduced CRR and released liquidity into the market, but the liquidity was not channelled into the high-impact, employment-generating sectors and productivity sectors of the economy.
“That is why we feel we should approach it through this means. We believe this will work. We will, from time to time, monitor the level of liquidity in the market and we feel that rather than the banks using their monies to buy Treasury Bills, they can put money into these sectors. And we will provide the liquidity to fund these transactions, as long as they meet these specified terms and conditions.”
A commercial paper (CP) is an unconditional promise by a person to pay to the order of another person a certain sum at a future date.
By Dipo Olowookere
About 0.04 per cent was recovered on Friday from the loss recorded by the Nigerian Exchange (NGX) the previous due to profit-taking.
Yesterday, investors were in the market with renewed vigour, mopping up stocks trading at relatively cheaper prices.
According to data, the insurance counter gained 0.41 per cent, the banking sector appreciated by 0.38 per cent, and the consumer goods index grew by 0.14 per cent.
The gains achieved by these three sectors were enough to lift Customs Street at the close of business despite the 0.26 per cent decline printed by the industrial goods segment and the 0.14 per cent loss suffered by the energy industry. The commodity counter was flat during the session.
A total of 43 equities gained weight on the last trading day of this week, while 26 equities shed weight, indicating a positive market breadth index and strong investor sentiment.
Red Star Express increased its share price by 10.00 per cent to N13.20, NCR Nigeria grew by 9.97 per cent to N128.55, SCOA Nigeria inflated by 9.96 per cent to N14.90, Omatek appreciated by 9.94 per cent to N1.77, and Deap Capital expanded by 9.85 per cent to N4.46.
On the flip side, McNichols decreased by 8.81 per cent to N6.00, Legend Internet crumbled by 7.56 per cent to N5.50, Cornerstone Insurance crashed by 6.48 per cent to N6.35, C&I Leasing contracted by 6.29 per cent to N8.20, and Austin Laz slipped by 5.78 per cent to N3.75.
Yesterday, 539.9 million shares valued at N16.7 billion were transacted in 48,023 deals versus the 1.0 billion shares worth N31.6 billion executed in 51,227 deals in the preceding day, implying a shrink in the trading volume, value, and number of deals by 46.01 per cent, 47.15 per cent, and 6.26 per cent apiece.
Zenith Bank was the most active for the day with 54.6 million stocks sold for N3.8 billion, Jaiz Bank traded 41.5 million units worth N359.4 million, Secure Electronic Technology transacted 37.7 million units valued at N39.2 million, Access Holdings exchanged 30.5 million units for N699.2 million, and Lasaco Assurance transacted 27.2 million units worth N68.3 million.
When the market closed for the day, the All-Share Index (ASI) went up by 72.21 points to 166,129.50 points from 166,057.29 points and the market capitalisation gained N31 billion to N106.354 trillion from N106.323 trillion.
By Adedapo Adesanya
It was a positive ending for the Naira this week after it further appreciated against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, January 16 by N1.33 or 0.09 per cent to sell for N1,417.95/$1 compared with the previous day’s N1,419.28/$1.
The domestic currency also gained N2.41 against the Euro in the official market to close at N1,647.51/€1 versus the preceding session’s closing price of N1,649.92/€1, however, it suffered a N7.97 loss against the Pound Sterling in the same market window to trade at N1,901.32/£1, in contrast to Thursday’s closing price of N1,893.35/£1.
In the same vein, the Nigerian Naira depleted against the Dollar at the GTBank FX counter by N2 to quote at N1,427/$1 compared with the previous day’s N1,425/$1, but strengthened against the greenback at the black market yesterday by N5 to settle at N1,485/$1 versus the N1,490/$1 it was exchanged a day earlier.
Improved supply conditions helped keep the market within range as exporters’ and importers’ inflows in addition to non-bank corporate supply enhanced liquidity as the Central Bank of Nigeria (CBN) made no visible intervention.
Stronger external inflows from foreign portfolio investors (FPIs) and improving current account dynamics, continue to align with structural support in the wider economy.
Nigeria has seen projections of a stronger economic or gross domestic product (GDP) growth and lower inflation in 2026, with these forecasts citing improved macroeconomic fundamentals and reform impacts.
As for the cryptocurrency market, it was mixed following selloff in precious metals and lower US stocks appeared to be denting crypto sentiment.
Gold and silver, both of which also enjoyed big rallies earlier this week, tumbled 1.2 per cent and 5 per cent, respectively while key US stock indexes — the Nasdaq, S&P 500 and Dow Jones Industrial Average — all reversed from early gains to modest losses in Friday trade.
Dogecoin (DOGE) shrank by 2.2 per cent to $0.1370, Ripple (XRP) slipped by 0.8 per cent to $2.05, Ethereum (ETH) went down by 0.7 per cent to $3,228.56, and Bitcoin (BTC) slumped by 0.6 per cent to $95,086.80.
Conversely, Litecoin (LTC) appreciated by 3.2 per cent to $74.48, Solana (SOL) rose by 0.4 per cent to $143.70, Cardano (ADA) jumped by 0.2 per cent to $0.3942, and Binance Coin (BNB) increased by 0.1 per cent to $935.88, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
Oil prices settled higher amid lingering worries about a possible US military strike against Iran, a decision that may still occur over the weekend.
Brent crude settled at $64.13 a barrel after going up by 37 cents or 0.58 per cent and the US West Texas Intermediate (WTI) crude finished at $59.44 a barrel after it gained 25 cents or 0.42 per cent.
The US Navy’s aircraft carrier USS Abraham Lincoln was expected to arrive in the Persian Gulf next week after operating in the South China Sea.
Market analysts noted that it doesn’t seem likely anything will happen soon. However, the weekends have become the perfect time for actions so as not offset the markets.
The market had risen after protests flared up in Iran and US President Donald Trump signalled the potential for military strikes, but lost over 4 per cent on Thursday as the American president said Iran’s crackdown on the protesters was easing, allaying concerns of possible military action that could disrupt oil supplies.
Iran produces approximately 3.2 million barrels per day, accounting for roughly 4 per cent of global crude production, so it was not a coincidence that markets rallied sharply through Tuesday and Wednesday as President Trump canceled meetings with Iranian officials and posted that “help is on its way” to Iranian protesters, raising fears of potential US military strikes that sent prices surging toward multi-month highs.
Weighing against those fears are potential supply increases from Venezuela.
The Trump administration is exploring plans to swap heavy Venezuelan crude for US medium sour barrels that can actually go straight into Strategic Petroleum Reserve (SPR) caverns, since not all all oil belongs in the reserve.
According to Reuters, the Department of Energy is considering moving Venezuelan heavy crude into commercial storage at the Louisiana Offshore Oil Port, while US producers deliver medium sour crude into the SPR in exchange.
Analysts expect higher supply this year, potentially creating a ceiling for the geopolitical risk premium on prices.
Some investors covered short positions ahead of the three-day Martin Luther King holiday weekend in the US.
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