Economy
Rewane Explains Implications of CBN Naira 4 Dollar Scheme
By Adedapo Adesanya
Last week, the Central Bank of Nigeria (CBN) shocked Nigerians when it launched a new initiative tagged Naira 4 Dollar Scheme.
The scheme was part of efforts to incentivize senders and recipients of international money transfer. Under the campaign, all recipients of diaspora remittances through licensed International Money Transfer Operators (IMTOs) will be paid N5 for every $1 received as remittance inflows.
This has sent many Nigerians wondering what the new policy meant for the Nigerian currency, which has faced headwinds in the last few months.
Speaking on the likely implications of the currency promo, a renowned economist and the Chief Executive Officer of Financial Derivatives Company, Mr Bismarck Rewane, during a chat with Business Morning on Channels TV on Monday, explained that the initiative from the CBN was a promo designed to increase the country’s awareness and the inflows of Nigeria’s diaspora into the country’s financial system.
He, however, noted that it was rare for the government to use such promotional schemes to promote inflows into the country.
“What is challenging here is that it is very unusual for policies to be tied around promos or gimmicks. Usually, promos and gimmicks are used by manufacturers to launch or push products, or airlines when they have low sales. So, they tie this kind of promo to buy one get one free or to revamp stagnant sales. So, it’s very unusual and peculiar for governments to engage in gimmicks or promos,” he noted.
He further said that the apex bank tailored the actions towards reducing the cost of remittances from the current cutthroat rates charged by the IMTOs.
The Governor of the central bank, Mr Godwin Emefiele, had recently explained that the models had been applied in Pakistan and Bangladesh. He said both South Asian countries had introduced reimbursement schemes to support inflows.
In the CBN chief’s words, “In Pakistan, the scheme, which is known as free send, has enabled record amount of inflows of over $2 billion a month even during the COVID-19 pandemic.
“Bangladesh introduced its own scheme in June 2019, which is a two per cent rebate on remittance inflows. Following this action, they have also seen a 20 per cent boost in remittance inflows.”
Breaking it down further, Mr Rewane noted that the current diaspora inflows to Nigeria are estimated between $5 million and $7 million per day and that the central bank aims to increase to $30 million per day.
“In other words, 30 times 20 working days, you will get maybe $600 million. Well, that is not the point. The point is that it is an effective depreciation of 1 per cent of the currency because ever since this year, the Investors and Exporters’ (I&E) window rate had gone from N390 to N411. So, if you add N5, it is another 1 per cent.
“Nominally, the exchange rate is unchanged, but in reality, it is a depreciation of 1 per cent de facto.”
He noted that there a lot of risks associated with the policy because some people will round trip the policy using arbitrage. Arbitrage is the simultaneous purchase and sale of the same asset in different markets in order to profit from tiny differences in the asset’s listed price.
“So, people will try to use arbitrage on the system. But the fact is that Nigeria is number six in the world in terms of diaspora and workers remittances. It is estimated at about $20 to $25 billion [annually].
“The current pandemic and unemployment rates in the US, Canada, the European Union and the United Kingdom are also going to affect the ability of Nigeria to remit money in.
“These two trends have actually dropped sharply because of vaccination certificates and all sorts of the pandemic effect. So, basically, in the end, I think it’s a gimmick. It is a promo, the central bank will fully understand in the end that there’s no other way of managing an exchange rate than converging them, having one rate so that people don’t stop exploiting it.
“In any case, you collect cash, and you take it to the parallel market or autonomous sources to sell the Naira, and then come back and you get the N5. What could happen is that you could turn $1,000 back again to your brother, who will bring it back.
“So, what could happen is that there could be what I call playing with neurons, the same money turning around the velocity of separation increasing, whilst the quantity supplied into the market will not increase.
“So, but again, heavy innovation leads to some kind of creativity and will help. But in the end, let me put it this way, the price mechanism, the exchange rate has to be market-determined.
“Policymakers will intervene, to preserve to ensure that we don’t suffer from shocks, but it’s a work in progress, and then we’ll wait and see what happens.”
The promo is expected to run from March 8 through the next two month till May 8.
By Adedapo Adesanya
The duo of MRS Oil and FrieslandCampina Wamco Nigeria Plc weakened the NASD Over-the-Counter (OTC) Securities Exchange by 0.68 per cent on Friday, June 5.
MRS Plc lost N19.00 during the session to sell at N171.00 per share compared with Thursday’s value of N190.00 per share, and FrieslandCampina Wamco Nigeria Plc depreciated by N8.70 to finish at N181.68 per unit compared with the preceding session’s N190.38 per unit.
As a result, the market capitalisation further lost N22.59 billion to close at N2.607 trillion versus the N2.630 trillion it ended a day earlier, and the NASD Unlisted Security Index (NSI) dropped 37.76 points to settle at 4,358.32 points, in contrast to the previous day’s 4,396.08 points.
The alternative stock market closed the last trading day of this week with a price gainer, Central Securities Clearing System (CSCS) Plc, which gained 6 Kobo to quote at N78.40 per share compared with the preceding session’s N78.34 per share. However, it could not prevent the market from going down at the close of business.
Yesterday, the volume of securities bought and sold by investors went down by 50.0 per cent to 140,345 units from the preceding day’s 280,714 units, the value of stocks decreased by 16.5 per cent to N17.9 million from the previous session’s N21.5 million, and the number of deals carried out by market participants fell by 35.7 per cent to 27 deals from the 42 deals recorded on Thursday.
When trading activities closed for the day, Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, trailed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 64.7 million units traded for N4.4 billion.
GNI Plc also ended the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units transacted for N6.5 billion, and Resourcery Plc with 1.1 billion units valued at N415.7 million.
By Dipo Olowookere
Renewed interest in financial stocks and others lifted the Nigerian Exchange (NGX) Limited by 0.15 per cent on Friday.
Customs Street closed higher yesterday despite the 1.37 per cent loss recorded by the consumer goods sector as a result of profit-taking.
This was offset by gains in the other key sectors of the local bourse, as the insurance counter chalked up 1,14 per cent. The banking space appreciated by 0.90 per cent, the industrial goods segment grew by 0.46 per cent, and the energy sector expanded by 0.01 per cent.
Consequently, the All-Share Index (ASI) went up by 366.00 points to 242,593.31 points from 242,227.31 points, and the market capitalisation gained N235 billion to close at N155.594 trillion compared with the previous day’s N155.359 trillion.
The trio of International Energy Insurance, Abbey Mortgage Bank, and DAAR Communications improved by 10.00 per cent each yesterday to N7.26, N9.35, and N1.98, respectively, while Zichis advanced by 9.39 per cent to N32.38, with Sovereign Trust Insurance up by 8.70 per cent to N2.50.
On the flip side, Academy Press lost 9.84 per cent to quote at N8.25, University Press depreciated by 9.73 per cent to N5.10, Africa Prudential dipped by 2.63 per cent to N12.95, Chams crumbled by 2.44 per cent to N4.00, and International Breweries slipped by 1.59 per cent to N12.35.
Business Post reports that the market breadth index was positive during the session after recording 37 appreciating equities and 14 depreciating equities, implying strong investor sentiment.
Abbey Mortgage Bank led the activity chart with a turnover of 164.1 million units worth N1.5 billion, Ellah Lakes sold 76.7 million units for N767.2 million, Access Holdings transacted 44.8 million units valued at N1.1 billion, Linkage Assurance exchanged 23.0 million units worth N41.2 million, and The Initiates traded 20.2 million units for N562.1 million.
At the close of trades, market participants transacted 608.5 million units worth N32.0 billion in 53,826 deals versus the 588.5 million units valued at N27.9 billion executed in 57,352 deals in the previous session. This showed that the number of deals eased by 6.15 per cent, the volume of transactions rose by 3.40 per cent, and the value of transactions soared by 14.70 per cent.
By Adedapo Adesanya
The Naira further depreciated against the United States Dollar by N3.46 or 0.25 per cent to N1,362.21/$1 from N1,358.75/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, June 5.
However, it appreciated against the Pound Sterling in the same market window during the session by N4.47 to trade at N1,823.59/£1 compared with the previous day’s N1,828.06/£1, and gained N7.00 against the Euro to sell at N1,574.58/€1, in contrast to Thursday’s closing price of N1,581.58/€1.
For another trading session, the Nigerian Naira maintained stability against the Dollar in the parallel market and the GTBank forex counter on Friday at N1,375/$1 and N1,372/$1, respectively.
The Naira is expected to remain strong in the near term, backed by a rise in external reserves, which are nearing $50 billion, enhancing analysts’ confidence about its outlook in the second half of 2026.
Heightened global uncertainty has reduced the incentive for importers and corporates to demand FX, as cautious trade weighs on import needs. Analysts estimate a $40 billion net FX position for the year, a projection anchored in oil windfall gains.
As for the cryptocurrency market, prices remained depressed following a strong US jobs report that spurred markets to price in higher-for-longer interest rates, sending Treasury yields and the dollar up while hammering stocks, especially AI-related names. Crypto markets saw heavy leverage washouts with about $1.6 billion in positions liquidated over 24 hours.
Ethereum (ETH) gave up 4.9 per cent to trade at $1,584.68, Solana (SOL) fell by 3.3 per cent to $63.22, Bitcoin (BTC) crashed by 1.9 per cent to $61,333.23, Dogecoin (DOGE) slipped by 1.8 per cent to $0.0821, and Ripple (XRP) moderated by 1.8 per cent to $1.09.
Further, TRON (TRX) dropped 1.6 per cent to sell at $0.3197, Binance Coin (BNB) slumped by 1.0 per cent to $581.18, and Cardano (ADA) declined by 0.4 per cent to $0.1589, while the US Dollar Tether (USDT) gained 0.07 to sell at $0.9997, and US Dollar Coin (USDC) closed flat at $0.9998.
-
Feature/OPED6 years agoDavos was Different this year
-
Travel/Tourism10 years ago
Lagos Seals Western Lodge Hotel In Ikorodu
-
Showbiz3 years agoEstranged Lover Releases Videos of Empress Njamah Bathing
-
Banking8 years agoSort Codes of GTBank Branches in Nigeria
-
Economy3 years agoSubsidy Removal: CNG at N130 Per Litre Cheaper Than Petrol—IPMAN
-
Banking3 years agoSort Codes of UBA Branches in Nigeria
-
Banking3 years agoFirst Bank Announces Planned Downtime
-
Sports3 years agoHighest Paid Nigerian Footballer – How Much Do Nigerian Footballers Earn