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Fear Grips Forex Dealers as Naira Hits N385/$

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Fear Grips Forex Dealers as Naira Hits N385/$

Fear Grips Forex Dealers as Naira Hits N385/$

By Modupe Gbadeyanka

The Naira Thursday appreciated to N385 per dollar in the Abuja segment of the parallel market, causing panic and confusion among bureaux de change (BDC) operators.

Vanguard investigation revealed that though the exchange rate of the Naira in the Lagos segment of the parallel market stabilised between N400 per dollar and N405 per dollar yesterday, the rate in Abuja fell to a record low of N385 per dollar due to increased dollar inflows.

Confirming this development to Vanguard, President, Association of Bureaux De Change Operators of Nigeria (ABCON), Mr Aminu Gwadabe said that appreciation of the Naira to N385 per dollar in Abuja though a good development is causing panic among BDCs because the CBN presently sells dollars to BDCs at N381 per dollar, and expects them to sell to the public at N399 per dollar.

He said the problem now is that customers are using the Abuja parallel market rate as reference for dollar purchase. “They insist they cannot buy at N400 per dollar when the dollar is going for N385 per dollar in Abuja,” he said.

Explaining why the sharp difference between the Lagos and Abuja parallel market exchange rates, Mr Gwadabe said, “The Abuja market is smaller in terms of demand than the Lagos market, and it is also dominated by civil servants. Lagos is where most of the demand is”. This situation, it was gathered has prompted some BDCs to suspend buying dollars from members of the public while others insist on buying from the public at N380 per dollar.

However, speaking on condition of anonymity, an Abuja-based BDC operator, said Naira’s appreciation in the Abuja market is due to increased dollar inflow. He said besides the dollar sales by the CBN, supply has been coming from people who had hoarded the currency for speculative purposes.

He said, “When they bring such dollars, we refuse to buy from them except they agree to sell at N380 or below because we knew they had kept the dollars all this while for speculation.”

www.vanguardngr.com/2017/03/naira-watch-panic-grips-forex-dealers-naira-rises-n385/

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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Economy

Crude Oil Rises on Positive US Economic Data

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crude oil

By Adedapo Adesanya

Positive economic data and robust fuel consumption in the world’s largest oil consumer and producer of crude oil, the United States, triggered a rise in the price of the commodity on Thursday.

Brent futures rose by $2.94 or 3.1 per cent to settle at $96.59 a barrel while US West Texas Intermediate (WTI) crude rose by $2.39 or 2.7 per cent to settle at $90.50.

Prices rallied after another round of impressive US economic data boosted optimism for an improving crude demand outlook.

While recession fears and the possible demand destruction that could come with such a recession have pulled down prices over the last month, economic data in the US showed a stronger labour market, further bolstering crude prices.

The number of Americans filing new claims for unemployment benefits fell last week and the prior period’s data was revised sharply lower, suggesting labour market conditions remain tight despite slower momentum due to higher interest rates.

On Wednesday, the EIA estimated that crude oil inventories had fallen by 7.1 million barrels, on top of millions of barrels of crude oil making their way out of the nation’s Strategic Petroleum Reserves (SPR).

Fuel inventories in the country also fell by another 4.6 million barrels for the week ending August 12, the EIA reported on Wednesday.

US crude oil inventories, excluding those in the SPR, are now just 425 million barrels, 6 per cent below the five-year average. Fuel inventories are 8 per cent below the five-year average, and distillates are 23 per cent below the five-year average.

The EIA data also calmed fears that furl demand could be falling after it showed the four-week average of implied gasoline demand rose to the highest level this year.

Bans by the European Union on Russian oil exports could dramatically tighten supply and drive up prices in coming months as it could reach up to 2 million barrels per day.

The new secretary general of the Organization of the Petroleum Exporting Countries (OPEC), Mr Haitham Al Ghais at its next meeting in September, OPEC+, which includes other oil suppliers like Russia, “could cut production if necessary, we could add production if necessary. … It all depends on how things unfold.”

However, disappointing economic data out of China this week, which signifies lower crude demand from the world’s largest oil importer, has capped oil’s increase, as well as a stronger US Dollar, which makes crude oil more expensive for foreign buyers.

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Economy

Nigerian Stocks Shed 0.29% as Investors React to News of Emirates’ Inability to Move Funds

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Nigerian stocks

By Dipo Olowookere

Investors at the Nigerian Exchange (NGX) Limited, especially the foreign portfolio investors (FPIs), reacted negatively to a shocking revelation that Emirates Airlines would be suspending its operations in Nigeria from next month because of its inability to repatriate about $85 million trapped in the country due to the foreign exchange (FX) crisis in Nigeria.

The news broke in the morning, just before proper trading activities resumed on the floor of the exchange and this triggered panic selling of Nigerian stocks during the trading day.

Nigeria has struggled to meet forex requests of users because of a shortage in supply despite the rise in the price of crude oil. The nation has not been able to earn more from crude oil sales due to theft and corruption.

On Thursday, the domestic stock market further depreciated by 0.29 per cent on the back of profit-taking in almost all the key sectors of the bourse.

Only the banking sector closed in the green territory by 0.18 per cent as the insurance space lost 1.41 per cent, the industrial goods counter depreciated by 0.51 per cent, the consumer goods index fell by 0.33 per cent, while the energy counter declined by 0.10 per cent.

Consequently, the All-Share Index (ASI) depleted by 144.79 points to 49,546.38 points from 49,691.17 points, while the market capitalisation shed N78 billion to close at N26.724 trillion verse N26.802 trillion in the earlier session.

Business Post reports that investor sentiment was strongly weak yesterday as the stock exchange ended with 24 depreciating stocks and 12 appreciating equities due to the disturbing development.

NEM Insurance lost 9.98 per cent to trade at N3.97, Okomu Oil depreciated by 9.96 per cent to N195.30, University Press went down by 9.91 per cent to N1.91, Lasaco Assurance shed 9.57 per cent to sell for N1.04, while Multiverse weakened by 8.70 per cent to N2.10.

On the flip side, FTN Cocoa gained 10.00 per cent to close at 33 Kobo, Regency Assurance rose by 8.70 per cent to 25 Kobo, Prestige Assurance improved by 8.33 per cent to 52 Kobo, Red Star Express climbed higher by 5.88 per cent to N2.70, while Caverton increased by 3.96 per cent to N1.05.

During the session, a total of 147.0 million stocks worth N2.7 billion were traded in 3,180 deals as against the 128.8 million stocks worth N4.1 billion traded in 3,492 deals a day earlier, representing an increase in the volume of transactions by 14.13 per cent, a decline in the value of trades by 35.75 per cent and a reduction in the number of deals by 8.93 per cent.

A breakdown showed that FBN Holdings accounted for 39.0 million units valued at N431.9 million, UBA contributed 13.0 million units worth N91.2 million, Access Holdings recorded 10.2 million units worth N84.4 million, GTCO sold 6.5 million units for N132.2 million, while Stanbic IBTC transacted 6.2 million units worth N172.9 million.

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Economy

CBN Aims to Boost eNaira Adoption by 800% to 8 Million

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eNaira

By Adedapo Adesanya

The Central Bank of Nigeria (CBN) is seeking to boost the adoption of the eNaira by 800 per cent in the next 12 months by luring people without bank accounts to join the fray.

This was disclosed by the CBN Governor,  Mr Godwin Emefiele, who gave the update on eNaira adoption at the grand finale of the e-Naira Hackathon, in Abuja on Thursday.

The central bank digital currency (CBDC) since its launch 10 months in October 2021 has attracted just 840,000 users.

Now, the apex bank is targeting 8 million users in the “second phase” of the digital currency’s expansion.

He explained that this is coming as transactions on the digital currency platform hit N4 billion.

According to him, “Since the launch of this great initiative, the eNaira has reached 840,000 downloads, with about 270,000 active wallets comprising over 252,000 consumer wallets and 17,000 merchant wallets.

“In addition, volume and value of transactions on the platform have been remarkable, reaching above 200,000 and N4 billion, respectively.”

The governor disclosed that despite the successes recorded on the initiative, the bank, in collaboration with private sector operators has started the second phase of the e-Naira.

His words, “Notwithstanding this appreciable progress, the second phase of the project has begun and it is intended to drive financial inclusion by onboarding unbanked and underserved users leveraging offline channels.

“Hence, greater success is envisioned for the project with phase two expected to deliver more gains with a target of about 8,000,000 active users based on estimations using the diffusion of innovation model.”

Mr Emefiele said that CBN remained strategic in charting the future of the Naira by balancing innovation with the stability of the currency.

He said, “Pursuant to achieving its mandate of preserving monetary and financial stability, the CBN is strategic in charting the future of Nigeria’s legal tender, be it in its traditional or digital form as the economy transits to a digital one as well as charting the course for innovation in the financial sector and in the infrastructure underpinning financial markets.

“Hence, the importance of getting the balance right between innovation and stability.

“Against this background, the launch of eNaira was timely and strategic in complementing the various diversification and digitisation initiatives of the Federal Government including the launch of the Nigeria Digital Economy Policy and Strategy (NDEPS), The National Broadband Strategy, as well as the introduction of the Start-Up Bill and a host of others.”

The CBN boss said that the eNaira would make a significant positive difference to Nigeria and Nigerians, as it would ease their participation in the global digital economy.

“Specifically, the eNaira is expected to enhance financial inclusion, support poverty reduction, enable direct welfare disbursement to citizens, support a resilient payments ecosystem, improve availability and usability of central bank money, facilitate diaspora remittances, reduce the cost of processing cash, and reduce cost and improve the efficiency of cross-border payment among others.

“The eNaira was also developed to provide Nigerians with a cheap, safe, and trusted means of payment. Unlike offline payments channels like agent networks, USSD, wearables, cards, and near-field communication technology, the eNaira would give access to financial services to underserved and unbanked segments of the population.

“Innovative products and services built on the eNaira would enhance Nigerians’ participation in the digital economy and promote further development of a burgeoning Fintech ecosystem.”

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