Economy

Emefiele Reveals When CBN Will Devalue Naira

Published

5 years ago

22/11/2019

By Adedapo Adesanya

Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, has said the likelihood of the apex bank devaluing the Naira is on the happenstance that the nation’s external reserves go below $30 billion and the international price of crude oil drops to $45 per barrel.

Mr Emefiele, according to a CBN publication, made this disclosure while speaking with potential investors in London, United Kingdom, on Wednesday.

The CBN chief was confident that the reserves were unlikely to drop to $30 billion due to the various policies put in place by the federal government as part of its plans to diversify the Nigerian economy.

Due largely to the tension between the United States and China, oil demand has been affected, leading to lower prices. However, the CBN boss noted that oil prices would need to weaken to 40 percent to create a scenario that would see that the bank not being able to maintain the stability of exchange rates across various segments.

As at the time of this report by Business Post, it was observed that price of the Brent Crude, under which Nigeria’s crude is categorized, was trading close to $64 per barrel, higher than the $60 and $57 benchmark in the 2019 and 2020 budgets respectively.

On the other hand, the external reserves, currently at $39 billion, would need to shed about 30 percent for the government to put in place any corrective measure and this was not the case.

Mr Emefiele’s interactions with investors came after signs of a growing backlog of foreign exchange demand. The central bank recorded a less foreign exchange inflows than outflows in the third quarter of 2019. This would be the third time such would occur in almost four years since the foreign exchange crisis of 2016 and the first time in 2019.

Also, net forex outflow in the third quarter was $3.6 billion, being the difference between inflows of $11.7 billion against outflows of $15.3 billion. This implies that net forex outflows may put pressure on the exchange rate which the CBN, through its interventions, has protected at all costs for more than two years.

Lower dollar inflows reduce the CBN’s capability in defending the Naira against any depreciation as it affects the country’s external reserves.

The CBN’s gross external reserves are already on the decline, after shrinking 12 percent from $45 billion at the start of the year.

Foreign investors have been particularly worried by the trend which surely rekindles bitter memories from 2016 when the foreign exchange backlog swelled to as much as $7 billion as investors could not take out their money.

Economy

NASD OTC Rises 1.18% as Index Jumps to 3,032.92 Points

Published

14 minutes ago

27/11/2024

Adedapo Adesanya

Nigeria's Unlisted Securities Market Sheds 0.78%, NASD Shares up 8.31%

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange rose by 1.18 per cent, with the Unlisted Security Index (USI) crossing the 3,000 mark after it went up by 35.24 points on Tuesday, November 26 to 3,032.92 points from the 2,997.68 points recorded in the previous session.

At the close of transactions yesterday, the market capitalisation increased by N12.36 billion to settle at N1.063 trillion, in contrast to Monday’s closing value of N1.050 trillion.

During the session, FrieslandCampina Wamco Nigeria Plc gained N3.31 to sell at N43.90 per share versus the N40.59 per share it traded a day earlier, and 11 Plc appreciated by N16.75 to end the session at N230.00 per unit versus the preceding closing rate of N213.25 per unit.

On the flip side, Afriland Properties Plc slipped by 11 Kobo to sell at N15.81 per share, in contrast to the N15.92 per share it was transacted a day earlier.

There was a slump in the volume of securities traded in the session by 80.2 per cent to 327,425 units from the 1.7 million units traded in the preceding session, but there was a rise in the value of transactions by 141.9 per cent to N15.7 million from the N6.5 million traded on Monday, and the number of deals decreased by 55.0 per cent to nine deals from the 20 deals carried out a day earlier.

At the close of business, Geo-Fluids Plc remained the most traded stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, followed by Okitipupa Plc with the sale of 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.3 million units worth N5.3 million.

Similarly, Aradel Holdings Plc maintained its position as the most active stock by value (year-to-date) with a turnover of 108.7 million units worth N89.2 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.3 million units sold for N5.3 billion.

Economy

Naira Sells N1,659/$1 at NAFEM on Improved Forex Supply

Published

35 minutes ago

27/11/2024

Adedapo Adesanya

By Adedapo Adesanya

The Naira strengthened its value against the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Tuesday by 0.97 per cent or N16.18 to exchange at N1,659.44/$1 compared wth the previous day’s value of N1,675.62/$1 amid an improvement in the supply of forex to the market segment by the Central Bank of Nigeria (CBN).

Data showed that the FX transactions for the trading session increased by 291.6 per cent or $317.19 million to $425.98 million from the $108.79 million recorded in the last trading session.

Also, the domestic currency improved its value against the Pound Sterling in the spot market yesterday by N23.42 to settle at N2,116.44/£1, in contrast to Monday’s closing price of N2,139.86/£1 and against the Euro, it closed flat at the value of N1,783.36/€1.

In the parallel market, the Nigerian currency remained unchanged against the US Dollar during the trading day at N1,750/$1, according to data obtained by Business Post.

At the 298th Monetary Policy Committee (MPC) meeting, the Governor of the CBN, Mr Yemi Cardoso, said the apex bank will continue to carry out measures to ensure stability in the FX market, and plans to avoid any move that will disrupt progress it has made. This was after the bank further raised the interest rate by 0.50 per cent to 27.50 per cent.

In the cryptocurrency market, some of the gains made during the recent post-US election price surge have weakened, as traders see the presidency of Mr Donald Trump as bullish for the industry especially with some of his allies and expected appointees to certain financial positions.

Ripple (XRP) shed 3.9 per cent to trade at $1.38, Binance Coin (BNB) depleted by 3.7 per cent to $619.77, Solana (SOL) slumped by 3.2 per cent to $230.87, Dogecoin (DOGE) fell by 3.0 per cent to $0.3938, Bitcoin (BTC) dropped 1.6 per cent to $93,220.19, Cardano (ADA) depreciated by 1.1 per cent to $0.9682, and Ethereum (ETH) slid by 0.2 per cent to at $3,417.79.

However, Litecoin (LTC) appreciated by 0.4 per cent to quote at $94.68, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00, respectively.

Economy

Haldane McCall, Others Lift Stock Exchange by 0.01%

Published

3 hours ago

27/11/2024

Dipo Olowookere

By Dipo Olowookere

The Nigerian Exchange (NGX) Limited had a narrow escape from the claws of the bears on Tuesday after it closed higher by a marginal 0.01 per cent.

This happened as investor sentiment waned yesterday, with profit-taking witnessed in the banking space, which fell by 0.21 per cent at the close of transactions.

However, bargain-hunting from the other sectors ensured that the bulls took charge of the bourse, with the insurance index rising by 0.91 per cent.

Further, the industrial goods sector appreciated by 0.76 per cent, the energy counter improved by 0.36 per cent, and the consumer goods space gained 0.09 per cent.

Consequently, the All-Share Index (ASI) moved up by 13.61 points to 97,639.88 points from 97,626.27 points and the market capitalisation expanded by N9 billion to N59.178 trillion from the preceding day’s N59.169 trillion.

The market breadth index was negative during the trading session as Customs Street ended with 24 price gainers and 25 price losers.

Haldane McCall topped the gainers’ chart after it chalked up 9.98 per cent to trade at N6.17, Sunu Assurances grew by 9.80 per cent to N3.81, Japaul increased its value by 9.72 per cent to N2.37, Prestige Assurance jumped by 9.64 per cent to 91 Kobo, and Neimeth leapt by 9.55 per cent to N2.18.

Conversely, Multiverse lost 9.92 per cent to finish at N5.90, Tantalizers slowed by 9.30 per cent to N1.17, UPDC REIT tumbled by 9.01 per cent to N5.05, Universal Insurance retreated by 5.88 per cent to 32 Kobo, and RT Briscoe fell by 5.67 per cent to N2.66.

Yesterday, investors transacted 552.1 million stocks valued at N8.0 billion in 9,305 deals versus the 671.3 million stocks sold for N10.6 billion in 10,464 deals a day earlier, representing a decline of 17.75 per cent, 24.53 per cent, and 11.08 per cent in the trading volume, value and number of deals, respectively.

The most traded equity for the day was Haldane McCall, which exchanged 177.1 million units for N1.1 billion, followed by Tantalizers with 37.0 million units sold for N46.7 million, UBA transacted 29.6 million units valued at N947.3 million, Prestige Assurance traded 28.6 million units worth N25.6 million, and FBN Holdings transacted 21.5 million units valued at N536.2 million.