Economy
Despite CBN RT200 FX Programme, Forex Scarcity Worsens
By Dipo Olowookere
Over a year ago, the Central Bank of Nigeria (CBN) announced that it was coming up with an initiative designed to attract $200 billion inflow from non-oil exports over the next three to five years.
The initiative, the RT200 FX programme, was to ensure exporters channel their inflow through the official window and sell it through the Investors and Exporters (I&E) segment of the foreign exchange (forex) market.
While speaking in November 2022 at the second edition of the RT200 Export Summit in Lagos, the governor of the CBN, Mr Godwin Emefiele, informed the audience that about $4.987 billion had been repatriated into the country by non-oil exporters, higher than the $3.190 billion achieved in 2021, noting that, “Of this amount, only $1.966 billion qualified for the rebate program, and $1.559 billion was sold at the I&E window or for own use.”
He stated that the central bank had met just 3 per cent of the RT200 FX target in nine months.
Business Post observed that this scheme, designed to boost FX supply in the country, has not solved the liquidity crisis in Nigeria, as many customers are unable to access forex.
Also, the external reserves of the nation have continued to deplete very fast despite a slight improvement in the prices of crude oil benchmarks in the global market.
Data obtained by this newspaper from the CBN showed that as of Monday, April 3, 2023, the amount left in the reserves stood at $35.415 billion, 0.64 per cent or $228 million lower than the $35.643 billion as of Monday, March 27, 2023.
It was observed that customers who approach banks for FX have been finding it difficult to get allocation because of a shortage in supply.
Also, withdrawing forex from domiciliary accounts has been cumbersome for many customers as banks are unable to honour their requests, and when asked to transfer to another domiciliary account, this is only honoured if the receiver operates such an account with the same bank.
“I went to withdraw from my domiciliary account last week, but I was told it was impossible because there was no cash available. When I requested to have the funds transferred to a forex trader, who uses another bank, I was informed it would not be possible except I get someone who operates a domiciliary account with my bank,” a customer of one of the tier-1 banks, who identified himself as Mr Kingsley Oche, told this reporter.
Similarly, commercial banks in the country have blocked the transfer of funds into cards from foreign payment platforms like PayPal.
Before now, Nigerians doing remote jobs get payments via PayPal and transfer their funds through prepaid and debit cards of Nigerian banks, but most of them have been unable to get their funds since December 2022 because of the FX crisis in the country.
“I am already frustrated by this forex issue in the country,” Mr Goke Akinsanya told this newspaper, noting that this situation has left him without much to spend.
Also, those who receive funds from International Money Transfer Operators (IMTOs) like Western Union have been having a slight challenge getting their money over-the-counter in Nigeria because of the forex scarcity.
However, there are indications that things might get better when the next administration takes charge of the control of the economy next month.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange extended its stay in the south for the fourth consecutive session after it shed 1.18 per cent on Friday, March 13.
The unlisted securities market recorded a loss despite closing without a price decliner, and ending with two price gainers led by Geo Fluids Plc, which gained 1o Kobo to sell at N3.10 per share compared with the previous day’s N3.00 per share. Industrial and General Insurance (IGI) Plc appreciated during the session by 2 Kobo to trade at 54 Kobo per unit versus Thursday’s closing price of 52 Kobo per unit.
When the market closed for the day, the market capitalisation lost N29.83 billion to close at N2.489 trillion compared with the N2.519 trillion it finished a day earlier, and the NASD Unlisted Security Index (NSI) crashed by 49.84 points to 4,160.46 points from 4,210.31 points.
Market activity improved yesterday, as the volume of transactions rose 179.5 per cent to 10.4 million units from 3.7 million units, but the value of trades declined by 68.4 per cent to N29.9 million from N95.0 million, while the number of deals weakened by 11.5 per cent to 46 deals from 52 deals.
Central Securities Clearing Systems (CSCS) Plc remained the most active stock by value on a year-to-date basis with 38.4 million units worth N2.4 billion, Okitipupa Plc followed with 6.4 million units traded at N1.1 billion, and FrieslandCampina Wamco Nigeria Plc transacted 6.3 million units for N584.3 million.
Resourcery Plc ended the trading session as the most traded stock by volume on a year-to-date basis with 1.1 billion units valued at N415.6 million, trailed by Geo-Fluids Plc with 130.8 million units valued at N504.5 million, and CSCS Plc with 38.4 million units worth N2.4 billion.
By Adedapo Adesanya
The Naira continued to claw back some gains against the Dollar in the different segments of the foreign exchange (FX) market, as its value was strengthened on Friday.
In the black market, it gained N10 against the United States Dollar yesterday to close at N1,400/$1 compared with the preceding day’s rate of N1,410/$1, and at the GTBank forex counter, it chalked up N6 to close at N1,385/$1, in contrast to the N1,391/$1 it was traded a day earlier.
Similarly, in the Nigerian Autonomous Foreign Exchange Market (NAFEX), it appreciated against the greenback during the session by N5.28 or 0.38 per cent to quote at N1,366.23/$1 versus Thursday’s closing price of N1,371.51/$1.
It also improved its value against the Pound Sterling in the official market on Friday by N21.81 to settle at N1,812.99/£1 compared with the previous day’s N1,834.80/£1, and gained N13.86 against the Euro to sell at N1,568.03/€1 versus N1,581.89/€1.
Pressure eased further on the FX market as the Central Bank of Nigeria (CBN) continued interventionist operations this week, selling Dollars to banks to boost liquidity after a $500 million boost last week.
This was complemented by inflows from foreign investors, exporters and non-bank corporates, among others, while Nigeria’s gross external reserves remained above $50 billion, the highest since 2009.
The Governor of the apex bank, Mr Yemi Cardoso, also eased fears of a Naira devaluation, saying the country’s financial system has been strengthened by reforms.
Regardless, external pressure looms as the US Dollar strengthened globally due to its war with Iran, now ongoing for three weeks.
Meanwhile, the cryptocurrency market was largely down as traders and investors continue to align with current realities.
The market is adapting to the conflict in real time. Early in the war, every headline produced an outsized reaction because nobody could price the tail risk. Now, traders have a framework where strikes happen, oil spikes and bitcoin dips only to recover again.
Cardano (ADA) depreciated by 3.8 per cent to $0.2623, Dogecoin (DOGE) lost 1.7 per cent to finish at $0.0948, Ripple (XRP) slumped 1.5 per cent to $1.39, Solana (SOL) dropped 1.4 per cent to sell for $87.33, Binance Coin (BNB) went down by 1.3 per cent to $653.58, Bitcoin (BTC) declined by 1.1 per cent to $70,670.63, and Ethereum (ETH) decreased by 0.9 per cent to $2,078.78.
However, TRON (TRX) appreciated by 1.7 per cent to $0.2941, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Adedapo Adesanya
The price of the major crude oil grade, Brent crude oil, closed above $100 on Friday for the second consecutive session, as the Iran war heads toward its third week, with oil tanker traffic through the Strait of Hormuz still effectively at a standstill.
It gained 2.67 per cent or $2.68 during the trading day to close at $103.14 per barrel, while the US West Texas Intermediate (WTI) crude oil grade appreciated by 3.11 per cent or $2.98 to settle at $98.71 per barrel.
Brent futures were up about 10 per cent for the week following the 27 per cent rise seen last week, which marked the biggest weekly gain in oil prices since the COVID-19 pandemic in 2020. WTI futures, which saw their best week since 1983 last week, ended the week more than 8 per cent higher.
US President Donald Trump said American forces launched a major bombing raid on Iran’s strategic Kharg Island, targeting military facilities on the key Persian Gulf outpost while warning Iran that its vital oil infrastructure could be destroyed if shipping in the Strait of Hormuz is disrupted.
The terminal accounts for roughly 90 per cent of Iranian crude shipments, loading millions of barrels per day onto tankers bound largely for Asian markets.
The US and Israel’s strikes in the conflict have largely targeted Iranian military and nuclear infrastructure. Oil facilities elsewhere in Iran have been hit, but Kharg’s massive storage tanks, jetties, and pipelines had remained untouched until the latest strike.
Iran’s new supreme leader, Mojtaba Khamenei, vowed to keep fighting in a message delivered via state television.
There have been a number of attacks on foreign ships in or near the Strait, feeding into concerns that a prolonged war could translate to a global economic shock.
Prices are rising despite the US and its allies rolling out some measures to keep a lid on energy costs.
The International Energy Agency (IEA) has agreed to release 400 million stockpiled barrels, the largest such action in history.
The US has issued a 30-day waiver for India to purchase sanctioned oil from Russia. President Donald Trump is considering loosening rules under the Jones Act that require American ships to transport goods between domestic ports, including oil and gas, in an effort to lower costs.
Traders are continuing to monitor developments in the Middle East.
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