Economy

Return of BDCs to Forex Market Will Strengthen Naira—ABCON

Published

5 years ago

25/05/2020

By Modupe Gbadeyanka

The Association of Bureaux De Change Operators of Nigeria (ABCON) has said the local currency has a very strong outlook going forward.

President of the group, Mr Aminu Gwadabe, while speaking on the proposed resumption of sales of foreign exchange (forex) to its over 5,000 members by the Central Bank of Nigeria (CBN), stated that the Naira outlook is expected to remain relatively strong on the back of growing foreign reserves at over $37 billion, increasing global demand for crude oil, rising commodity prices and rising global trade.

He blamed the present pressure on the domestic currency on activities of currency speculators, who he expressed confidence will soon lose up to N10 billion.

He said these speculators have continued to make spurious demand for Dollar with the hope of making good returns from the rising gaps between official and parallel market rates.

But he warned them of the looming danger for their trade if they refuse to retrace their steps as they will incur losses in the next few months as the CBN prepares for BDCs’ return to the forex market after nearly six weeks of absence due to the COVID-19 pandemic and the need to protect operators.

Mr Gwadabe said the CBN’s planned lifting of moratorium on dollar sales to BDCs, reopening of the airports for air travels as well as global ease on restriction of movement are positive indications that dollar flows to the economy will soon improve.

He said the Naira has been exchanging at N461 to a dollar at the parallel market, but will be upbeat once dollar sales to BDCs commence.

“The return of over 5,000 BDCs to the forex market will add great strength to the Naira and lead to major capital losses for forex speculators.

“It happened in 2016 and it will happen again in 2020. The return of the BDCs will immediately boost Naira recovery and put the enemies of the economy to shame.

“We are committed to the CBN’s exchange rate stability and will take all necessary steps within set rules and regulations to keep the naira stable,” he assured.

Mr Gwadabe said the return of BDCs to the forex market will help chase away speculators, curb rising inflation, boost productivity and employment, enhance price discovery, enhance market transparency and competitiveness.

Aside positive developments in the global economy, the CBN has taken steps to address the risks facing the naira, which will lead to rapid recovery for the local currency.

The ABCON chief said the measures taken by oil producers to sustain price stability were commendable as many governments across the world have agreed to oil production adjustment targets and continued collaboration with all their partners, a move he said will benefit Nigeria.

He said amid huge capital flow reversal, driven by risk-off sentiment, the impact on the Naira was milder compared with the fate of other African countries’ currencies.

According to him, currency rates of African countries show that the South African rand is the worst hit, down 20.6 percent year-to-date.

This was followed by the Angolan Kwanza which has depreciated by 16.1 percent, Mauritius Rupee (-8.8 percent), Nigerian Naira (-6.6 percent) and Kenyan Shilling (-5.3 percent) followed in that order.

Others include the Tunisian Dinar (-3.8 percent), Morocco’s Dirham (-2.7 percent) and the West African Monetary Union’s CFA franc (-2.3 percent). Notably, the Egyptian Pound, up 1.3 percent year-to-date, remains the best performer across the region.

Mr Gwadabe explained that while an adjustment of the Nigerian naira from N360/$ to N385/$ broadly reflects the 6.6 percent weakness observed in the official market, it must be noted that currency depreciation at the unofficial market is much deeper, currently at N461/$.

Speaking on ABCON’s reopening guidelines to all its members nationwide, he said operators will be required to have on-boarding of the queuing crowd ticketing management application known as ABCON 360°QSM portal with over 80 percent members registered nationwide so far.

“We are also updating all regulatory obligations during the lockdown, fumigation of members’ offices/markets, distribution of second phase of face mask nationwide to our members.

“There is also the provision of wash hand basins, sanitizers at our distributions centres while members are to explore school fees, mortgage, subscription payments as one of their allowable scopes during post COVID-19,” he said.

Economy

Nigeria Adds 150,000 b/d Crude Production in November 2024

Published

1 hour ago

12/12/2024

Adedapo Adesanya

By Adedapo Adesanya

Nigeria added 150,000 barrels per day to its crude production in November 2024 as it continues to pursue an ambitious 2 million barrels per day target.

According to the Organisation of the Petroleum Exporting Countries (OPEC), Nigeria’s oil production rose to 1.48 million barrels per day in November, up from 1.33 million barrels per day the previous month.

In its Monthly Oil Market Report (MOMR), OPEC revealed that at 1.48 million barrels per day, it is the continent’s leading oil producer, surpassing Algeria’s 908,000 barrels per day and Congo’s 268,000 barrels per day.

Business Post reports that OPEC doesn’t account for condensates, which Nigeria’s accounts for in its broader 2 million barrels per day target.

Despite the surge in production levels, Nigeria is still under producing its 1.5 million barrels per day output quota under a deal involving OPEC and 10 other producers known as OPEC+.

OPEC said it relied on primary data gotten through direct communication, noting that secondary sources reported 1.417 million barrels per day as Nigeria’s crude production in November — up from 1.4 million barrels per day in October.

The data also shows that OPEC’s total oil production among its 12 members rose by 104,000 barrels per day in the month under review.

According to secondary sources, the total of the 12 OPEC countries’ crude oil production averaged 26.66 million barrels per day in November 2024.

“Crude oil output increased mainly in Libya, Iran, and Nigeria, while production in Iraq, Venezuela, and Kuwait decreased”, OPEC said.

“At the same time, total non-OPEC DoC crude oil production averaged 14.01 mb/d in November 2024, which is 219 tb/d higher, m-o-m. Crude oil output increased mainly in Kazakhstan and Malaysia,” the organisation added.

In a related development, OPEC trimmed its 2024 and 2025 oil demand growth forecasts for the fifth time this year.

Now, the cartel expects the world’s oil demand growth at 1.61 million barrels per day from the previously 1.82 million barrels per day.

For 2025, OPEC says the world oil demand growth forecast is now at 1.45 million barrels per day, a 900,000 barrels per day cut from the previously expected 1.54 million barrels per day.

On the changes, OPEC says that the downgrade for this year owes to more bearish data received in the third quarter of 2024 while the projections for next year relate to the potential impact that will arise from US tariffs.

Economy

Afriland Properties, Geo-Fluids Shrink OTC Securities Exchange by 0.06%

Published

8 hours ago

12/12/2024

Adedapo Adesanya

By Adedapo Adesanya

The duo of Afriland Properties Plc and Geo-Fluids Plc crashed the NASD Over-the-Counter (OTC) Securities Exchange by a marginal 0.06 per cent on Wednesday, December 11 due to profit-taking activities.

The OTC securities exchange experienced a downfall at midweek despite UBN Property Plc posting a price appreciation of 17 Kobo to close at N1.96 per share, in contrast to Tuesday’s closing price of N1.79.

Business Post reports that Afriland Properties Plc slid by N1.14 to finish at N15.80 per unit versus the preceding day’s N16.94 per unit, and Geo-Fluids Plc declined by 1 Kobo to trade at N3.92 per share compared with the N3.93 it ended a day earlier.

At the close of transactions, the market capitalisation of the bourse, which measures the total value of securities on the platform, shrank by N650 million to finish at N1.055 trillion compared with the previous day’s N1.056 trillion and the NASD Unlisted Security Index (NSI) went down by 1.86 points to wrap the session at 3,012.50 points compared with 3,014.36 points recorded in the previous session.

The alternative stock market was busy yesterday as the volume of securities traded by investors soared by 146.9 per cent to 5.9 million units from 2.4 million units, as the value of shares transacted by the market participants jumped by 360.9 per cent to N22.5 million from N4.9 million, and the number of deals increased by 50 per cent to 21 deals from 14 deals.

When the bourse closed for the day, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units valued at N3.9 billion, followed by Okitipupa Plc with 752.2 million units worth N7.8 billion, and Afriland Properties Plc 297.5 million units sold for N5.3 million.

Also, Aradel Holdings Plc, which is now listed on the Nigerian Exchange (NGX) Limited after its exit from NASD, remained the most active stock by value (year-to-date) with 108.7 million units sold for N89.2 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units worth N5.3 billion.

Economy

Naira Weakens to N1,547/$1 at Official Market, N1,670/$1 at Black Market

Published

9 hours ago

12/12/2024

Adedapo Adesanya

By Adedapo Adesanya

The euphoria around the recent appreciation of the Naira eased on Wednesday, December 11 after its value shrank against the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N5.23 or 0.3 per cent to N1,547.50/$1 from the N1,542.27/$1 it was valued on Tuesday.

It was observed that spectators’ activities may have triggered the weakening of the local currency in the official market at midweek as they tried to fight back and ensure the value of funds in foreign currencies strengthened.

The domestic currency was regaining its footing after the Central Bank of Nigeria (CBN) launched an Electronic Foreign Exchange Matching System (EFEMS) platform to tackle speculation and improve transparency in Nigeria’s FX market.

At midweek, the Nigerian currency depreciated against the Pound Sterling by N3.56 to close at N1,958.68/£1 compared with the preceding day’s N1,955.12/£1 and against the Euro, it slumped by 34 Kobo to trade at N1,612.66/€1, in contrast to the previous session’s N1,613.00/€1.

As for the black market segment, the Naira lost N45 against the American currency during the session to quote at N1,670/$1 compared with the N1,625/$1 it was traded a day earlier.

A look at the cryptocurrency market showed a recovery following profit-taking as the US Consumer Price Index report matched economist forecasts.

The news was enough to convince traders that the Federal Reserve is certain to trim its benchmark fed funds rate another 25 basis points at its meeting next week.

The move also saw Bitcoin (BTC), the most valued coin, return to the $100,000 mark as it added a 2.9 per cent gain and sold for $100,566.12.

The biggest gainer was Cardano (ADA), which jumped by 15.00 per cent to trade at $1.16, as Litecoin (LTC) appreciated by 10.4 per cent to sell for $121.76, and Ethereum (ETH) surged by 7.0 per cent to $3,929.30, while Dogecoin (DOGE) recorded a 6.7 per cent growth to finish at $0.4181.

Further, Binance Coin (BNB) went up by 5.2 per cent to $716.72, Solana (SOL) expanded by 4.6 per cent to $229.77, and Ripple (XRP) increased by 4.2 per cent to $2.43, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 apiece.