Category Archives: FOREX

Banks lose N1trn current account deposits in February

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By Babajide Komolafe

This was one of the highlights of the Depository Corporation survey for February 2017 recently published by the Central Bank of Nigeria (CBN). Among other things, the survey revealed that total demand (current account) deposit of banks fell by 10.75 per cent to N8.6 trillion in February from N9.636 trillion in January. Similarly, currency outside the banks declined month-on-month (m-o-m) by 1.16 per cent to N1.61 trillion. Consequently, Narrow money supply declined m-o-m by 9.36 per cent (and 11.35 per cent year-to-date, y-t -d) to N10.21 trillion.

According to the report, broad money supply, M2, moderated month-on-month by 4.34 per cent to N22.37 trillion following a 0.46 per cent increase in Net Domestic Assets (NDA) to N13.82 trillion and an 11.21 per cent decline in Net Foreign Assets (NFA) to N8.55 trillion.  The increase in NDA followed a 0.54 per cent  m-o-m increase in Net domestic credit to N26.77 trillion which more than offset a 0.62 per cent increase in other liabilities (net) to N12.95 trillion.

Continue reading Banks lose N1trn current account deposits in February

Breaking: CBN Revalues Dollar Rate for Invisibles to N357, Orders Banks to Retail At N360

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According to a tweet from the CBN, and a statement from its spokesperson Isaac Okorafor, the CBN will sell forex to banks at N357/$1, while banks will sell to their customers at N360/$1 for invisibles (BTA, medicals, fees, etc).

All customers requesting forex for their personal and business travel allowances (PTA and BTA), tuition and medical fees, should buy at a rate not more than N360 to the dollar. “Banks are to post the new rates in their banking halls of their branches immediately,” he said.

This rate change only affects invisible transactions for retail users. The interbank rate, which trades at a band around the N307/$ mark still remains, however.

As a form of monitoring, Okorafor also mentioned that examiners will be sent out to ensure compliance and erring banks will be punished. This is coming on the back of complaints by Bureau de Change operators about the large profit margins that commercial banks are afforded by accessing FX at CBN rates.

This move by the CBN is expected to further push down the rates in the parallel market – where the exchange rate closed at about N390/$1 last week – especially if the CBN can maintain its interventions. This leads towards the exchange rate unification that Governor Emefiele hinted at in recent weeks. As at 20th February, the Naira was selling at about N522/$1 in the parallel market but has risen 38% within a month after the CBN pumped nearly $2.5 billion into the market.

#NAIRAMETRICS

FMDQ Suspends Spot FX Closing Rate, Confirming Flexible Exchange Rate Is Broken

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The FMDQ OTC, the official market for bonds, treasury bills and forex trading has approved the suspension of the FMDQ Spot FX Closing Rate with immediate effect.

The FMDQ in a press release signed by Jumola Olaniyan, the Divisional Head Market Development & Regulation, explained the reason for the suspension was due to the “transparency and liquidity challenges, and prevalent disequilibrium currently being faced in the Nigerian Foreign Exchange”.

Rather than publish the daily Spot FX closing rates, the FMDQ will now reference the last available executed trade on the Thomson Reuters NGN=D1 module at 2:00 PM and will be referenced the “CBN Closing Rate”.

This remarkable development is perhaps the first official sign that the flexible exchange rate introduced by the Central Bank of Nigeria is broken. The Managing Director of the FMDQ, Koko Onadele, had rebuked the CBN for fragmenting the exchange rate market with its tight control of forex prices and supply.

This latest press release follows a situation where the country now has about 7 official/unofficial exchange rate making the FMDQ spot quote basically irrelevant.

Sanusi Wants Flexible Exchange Rate System Fully Implemented | THISDAYLIVE

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The Emir of Kano and former Central Bank of Nigeria (CBN) Governor, Alhaji Muhammad Sanusi II, has said the flexible exchange rate regime recently introduced by the central bank is not being fully implemented, just as he warned that targeting a pegged rate will not resolve the current forex problem.

He urged the central bank to allow the forces of demand and supply to determine the true value of the nation’s currency, in line with the flexible exchange rate policy.

He said this at the Risk Managers Association of Nigeria’s (RIMAN) annual conference in Lagos yesterday.

Continue reading Sanusi Wants Flexible Exchange Rate System Fully Implemented | THISDAYLIVE

Economy: The floodgates have been breached – by Henry Boyo in opposition to the flexible forex policy.

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The Central Bank of Nigeria’s decision to float the naira in response to dollar demand and supply, in such austere times as this, will probably be ultimately remembered as another policy shift that breached the gates and unleashed devastating floods that swept away any flickering hope of economic diversification or credible inclusive growth. The serial devaluation dictated by the 1986 Structural Adjustment Programme was another such event that disenabled our economy, traumatised our people and challenged our traditional value system in many ways.

Continue reading Economy: The floodgates have been breached – by Henry Boyo in opposition to the flexible forex policy.

Results Are In: Nigeria’s New Official Exchange Rate After Currency Float

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The official floating of the Naira opened at the Interbank on Monday, 20th of June after decades of a Naira peg by successive Nigerian Governments and Central Bank Governors.

The CBN Governor, Godwin Emefiele had last Wednesday announced to the world that Nigeria would be introducing a new exchange rate policy that will see the price of the dollar dictated by market forces rather than a fixed exchange rate.

We have been monitoring activities all day and after several speculations can now reveal a summary of what transpired at the market.

Continue reading Results Are In: Nigeria’s New Official Exchange Rate After Currency Float

Fitch Just Gave Its Verdict On Nigeria’s New Flexible Exchange Rate Policy

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Rating Agency Fitch has waded in on the new Flexible Exchange Rate Policy issued by the Central Bank of Nigeria (CBN) on Wednesday June 15, 2016.

Fitch says Nigeria’s planned shift to a more flexible foreign-exchange regime could aid the sovereign’s adjustment to lower oil prices and support growth, although implementation may present challenges. We highlighted key points in the article which you will notice in the course of your reading.

Continue reading Fitch Just Gave Its Verdict On Nigeria’s New Flexible Exchange Rate Policy

How New Exchange Rate Policy Will Unshackle The Consumer Goods Industry

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The new foreign exchange regime adopted by the Central Bank of Nigeria (CBN) will unshackle consumer goods firms that have hitherto been in bondage as restrictions prevented them from accessing dollars to import raw materials and pay suppliers.

Godwin Emefiele, the governor of the apex bank, last week reopened the interbank foreign exchange market and have the naira, completely determined by the market forces.

The Naira had been held at the N197-N199 since mid 2015, a policy that caused capital flight as investors fret that the currency may be overvalued and an abrupt devaluation could culminate in loss of significant investment.

But with the new Forex regime kickstarting today, and with its attendant of liquidity flow in the system, consumer goods firms that had been pained by the old policy will have the leeway to  embark on the  desired expansion drive as access to dollar will enable them buy plants and machineries for the purpose of bolstering production.

  Continue reading How New Exchange Rate Policy Will Unshackle The Consumer Goods Industry

Full Text: CBN Governor’s Speech On The New Forex

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Good afternoon ladies and gentlemen and welcome to the Central Bank of Nigeria (CBN). The Management of the Bank has called this Press Conference in response to one of the commitments contained in the Communiqué of the Monetary Policy Committee (MPC) of 24th May 2016.

Having consulted widely and prepared carefully, the committee of Governors of the CBN is delighted to unveil to relevant stakeholders and the general public, the broad framework and guidelines of the Flexible Exchange Rate Inter-bank Market, which we alluded to at the end of that MPC Meeting. Before I proceed into the details of this new policy, please permit me to provide you with a brief context.

Continue reading Full Text: CBN Governor’s Speech On The New Forex

CBN sells $2.188bn to banks in three months

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As the Central Bank of Nigeria (CBN) continues with its demand management policy in foreign exchange (forex) allocation to financial institutions, the returns on foreign exchange utilisation have shown that it sold a total of $2,177,999,996 to commercial and merchant banks as well as the Bank of Industry (BoI) between March 1st and May 31st 2016.

A breakdown of the weekly returns on forex utilisation compiled by THISDAY showed that while in March 2016, the banking sector regulator sold a total of $921,352,549 to banks, and $669,405,241 in April, the financial institutions were allocated a total of $587,242,206 in May. The report however showed a gradual decline in the monthly forex sale by the central bank.

Continue reading CBN sells $2.188bn to banks in three months