TheNewsGuru

Tag: CBN

CBN

  • Emefiele to appear before reps over forex sale to oil marketers

     

    The House of Representatives on Monday summoned the Governor of Central Bank of Nigeria, CBN, Mr Godwin Emefiele, over the apex bank alleged sale of foreign exchange to International Oil Companies (IOCs).

    Emefiele’s invitation by the House’s Ad hoc Committee on the Review of Pump Price of Petrol followed the committee’s rejection of the records of the foreign exchange transactions presented to it.

    The committee, which continued its public hearing on the issue in Abuja, ordered that the CBN governor should appear with details of all beneficiaries of the foreign exchange deals.

    He is also expected to give insight into the banks used by the apex bank in the transaction with the oil marketers.

    In the rejected record presented on behalf of Emefiele by Dr Alvan Ikoku, Director, Financial Market Department of CBN, he told the committee why the bank acted as third party to oil companies and importers of petroleum products.

    He said that the CBN took over the purchase of dollars from the IOCs and began to sell directly to petroleum marketers seeking foreign exchange to import products.

    It was, however, not revealed in the records how much the apex bank sold the currencies to the companies even when it stated that Emefiele determined the rate the currencies were sold to oil marketers.

    The committee Chairman, Rep Raphael Igbokwe, directed that the CBN boss should prepare explanations on the legal grounds or provisions that allowed IOCs to operate as financial institutions selling foreign exchange to Nigerians.

    According him, by so doing the IOCs acted as parallel financial clearing houses.

    The committee demanded explanation on the criteria for the allocation of foreign exchange to dealers as well as necessary documents to show such allocations to the marketers.

    It also ordered the appearance of Managing Director of Duke Oil and other oil marketers, who were invited.

    Igbokwe explained that the order was important as the representatives of the oil marketers were not in the capacity to respond to some allegations levelled against the companies.

    Commodore P.A. Efedue who represented the Nigerian Navy, explained that multiple charges by government agencies operating at the ports were responsible for most oil importers avoiding Nigerian ports.

    Efedue said that the charges were part of the reasons why some of the oil marketers preferred to deliver their products through ports in neighbouring countries.

    He said that the development was in spite of security which had improved tremendously at Nigerian ports.

    “The oil marketers come to my office every day and I ask why Lome, not Lagos port. They said the reason is that charges in Lagos are higher,’’ Efedue said.

    He, therefore, advised that the charges at the ports should be addressed to attract oil vessels to Nigeria’s ports, saying that the rate of insecurity in the country’s waterways had reduced.

    “Cases of piracy have reduced, so it is the charges that are the issue with the marketers.”

    He also said that the navy did not charge any money to grant approval to marketers, adding that the collaboration between navy and NIMASA was helping in securing the water ways.

    On his part, Commodore A.O. Bamidele of the Operations Directorate, Naval Headquarters, also reiterated that insecurity was not the reason for marketers preferring neighbouring countries’ ports.

    “It is not security; look at Lagos harbour and anchorage, we don’t have security challenges.

    “It is only in Bayelsa and Rivers area but we are making efforts to put it in check,” Bamidele said.

     

    NAN


  • CBN sells N400 billion Treasury bills to clear money market liquidity

     

    The Central Bank of Nigeria, CBN sold about 400 billion naira ($1.27 billion) of Treasury bills on Friday, lifting the interbank lending rate up to 12 percent, traders said.

    The bank sold 82 billion naira in 181-day Treasury bills at 18 percent and 309 billion at 18.6 percent, mopping up liquidity from the money market and pushing up the cost of borrowing among commercial lenders.

    “We have some major placers quoting about 20 percent for overnight placement, but most takers are not willing to borrow at that rate,” one dealer said, adding that the rate eventually settled around between 10 percent and 12 percent at 1328 GMT.

    Markets had opened on Thursday with a surplus liquidity of about 467 billion naira due to an injection of matured Treasury bills until the central bank later debited banks for the purchases of 302.4 billion in primary market Treasury bills.

    Traders said the central bank on Friday further moved to reduce liquidity with the sale of open market operations bills, which fetched returns above the inflation rate.

    Nigeria raised 302.4 billion naira at Wednesday’s Treasury bills auction, more than the 242 billion planned due to strong demand for the one-year debt, while payment for the purchased was debited from commercial lenders’ accounts on Friday.

    Local currency traded flat at both official interbank window and parallel market, with black market traders quoting the naira flat at 498 to the dollar. Commercial lenders quoted the currency at 305.25 a dollar, about the level it has traded since August.

    Nigeria’s main all-share index . fell by 0.52 percent to close at 25.802 points on Friday, dragged down by losses in Nestle (2.86 percent) and Guaranty Trust Bank (2.46 percent). ($1 = 314.50 naira)

     

     

    Reuters

     

  • Forex scarcity: CBN unfazed, says ban on 41 items irreversible

    Forex scarcity: CBN unfazed, says ban on 41 items irreversible

    The Central Bank of Nigeria,CBN has rejected calls by the Organised Private Sector, OPS and other stakeholders to reverse its foreign exchange ban on 41 goods which the apex bank insisted the country can produce.

    The CBN noted that rather than life the ban, it would perfect plans to support the various sectors which can provide the goods needed to rely less on foreign ones.

    The apex bank’s decision was made known by its Acting Director, Corporate Communications, Mr. Isaac Okoroafor.

    Okoroafor noted that despite criticisms, CBN would not drop the policy nor bow to “self-serving” interests.

    In his words: “We have observed with great concern the continued and unwarranted attack on our policies by a group of Nigerians, whose real interests, findings have shown, are anything near altruistic, but rather self-serving and unpatriotic.”

    He said while the CBN respected Nigerians’ or stakeholders’ views, it found it curious that some interests have remained persistent in misinforming the public, with the aim of discrediting the genuine management of the economy.

    “Indeed, self-centered individuals, who have failed to assail our patriotic position, have resorted to the sponsorship of serial propaganda to misinform and mislead the public on the objectives of our policies,” he said.

    He said some unpatriotic elements were pushing for a reversal of the policy aimed at conserving forex, stimulating agriculture and manufacturing, and promoting exports.

    Okoroafor blamed the economic challenges on the past practice of frittering away huge oil earnings.

    “Our decisions on forex management are prompted by the challenge posed by the level of depletion of the country’s reserves, arising from issues, such as drastic reduction in oil earnings, speculative attacks and round tripping,” he explained.

    According to him, the pressure on the foreign reserves has persisted due to huge reduction in monthly foreign earnings, which fell from over $3.2 billion monthly in 2013 to below $500 million last year, when the demand for the US dollar, particularly by importers, continued to rise.

    Despite the challenges, the CBN has continued to ensure that there is liquidity and transparency in the forex market, while checking inflation, and promoting productivity in critical sectors of the economy, Okoroafor said.

    However, the Organised Private Sector (OPS) members are not swayed by CBN’s position. Describing the policy as worrisome, they insisted that the apex bank’s unorthodox forex allocation system would continue to hamper growth.

    The Lagos Chamber of Commerce and Industry (LCCI) Direc-tor-General, Mr. Muda Yusuf, said, in on a monitored radio programme in Lagos, that it was worrisome that the CBN had remained silent on some forex-related issues that were affecting the economy.

    He listed them to include acute illiquidity, inflow impediments and too tight regulations on movement of funds.

    Others, he said, were the effects of the forex policy on non-oil exports, its disincentive to foreign direct investments and the negative impact of the policy on portfolio inflows.

    “Others are adverse effects on remittances by airlines, foreign investors’ dividends and profits; adverse effects on Diaspora remittances and the effects on investors’ confidence,” Yusuf said.

    Yusuf however called on the Vice President, Prof. Yemi Osinbajo who is head of the nation’s economic team to help prevail on the CBN to make an urgent review of its ‘unfavourable’ forex policies before Nigeria loses all its willing investors to other countries with more friendly business policies.

  • Nigeria’s Foreign reserve now $27.4bn

    Nigeria’s foreign reserve has recorded 18.2 per cent accretion since its recent uptrend, standing at $27.4 billion with the latest figures from the Central Bank of Nigeria, CBN, for January 2017.

    The uptrend which began October 20, 2016 had persisted with minor pullbacks recorded on November 1, 2016 and December 14, 2016, reversing the over one-year persistent decline which bottomed out at $23.2bn on October 19, 2016.

    In the 12 weeks upward trend, the reserve added $4.2 billion as against $8.6 billion it had lost since President Muhammadu Buhari came into power in 2015.

    The latest figure of the reserve is also on 10 months high over the last one year while indications are that accretion would continue on the back of improved oil revenue.

    The month-on-month trend shows an increasing tempo in the month of January 2017 when it garnered $2.002 billion, a huge 7.9 per cent rise. December 2016 accretion was $1.025 billion, about 4.2 per cent rise while November recorded accretion of $840 million, about 3.6 per cent rise.

    The uptrend was largely as a result of the rises in the international oil price (Nigeria’s major foreign exchange earner) in the recent month especially in January when it settled above $55 per barrel, as against last year’s average of $43 and 2015 average of $38.

    The positive development in the international oil price began mid last year but Nigeria could not benefit much from it due to worsened militancy in the Niger Delta which curtailed oil production and exports with output at a record low of about 1.4 million barrels a day.

    However, the positive development could not roll back the massive exchange rate pressure which had come on the Naira since last year. Eventually the Naira/USD value crashed beyond N500/USD1 this week as supply of foreign exchange remained elusive.

    Also the positive development in the external sector seems not to have resonated with the revenue pressure the federal government has been experiencing since 2015.

    In addition to over N400 billion the government had borrowed from the money market in the month of January 2017, it plans to raise $300m (almost N100bn) by selling a Diaspora Bond targeting Nigerians living abroad.

    The bond, which will have a maturity of five to seven years, is expected to be issued by June this year.

    Nigeria has asked Goldman Sachs and Stanbic IBTC Bank, the local unit of South Africa’s Standard Bank , to advise it on the sale of the maiden bond. It also appointed United Bank for Africa and First Bank of Nigeria as advisors on the deal.

    The government is also pressing on with its request on the National Assembly to approve its external borrowing plan targeting $30bn (about N10tr).

  • We are not responsible for disparity in Forex rates – CBN

    Following the backlash from both public and private organisations on the disparity in the prices of Forex to the various consumers, the Central Bank of Nigeria, CBN, has cleared the air, saying it is not responsible for fixing Forex exchange purchase figures.

    The clarification was contained in a statement released and signed by the CBN’s Director of Corporate Communications, Isaac Okorafor.

    TheNewsGuru.com reports that the new foreign exchange policy prioritizes Forex sales to manufacturers, agriculture, plant and machinery, critical raw materials, etc.

    The statement reads in full: “Following reports alleging irregularities in the rates at which foreign exchange was obtained by some individuals and companies from different Deposit Money Banks (DMBs) under the new [60:40] foreign exchange policy by the Central Bank of Nigeria (CBN), which prioritizes FOREX sales to manufacturers, agriculture, plant and machinery, critical raw materials, among others, we wish to make the following clarifications,” the statement read.

    “The CBN neither allocates foreign exchange nor does it deal directly with bank customers. The CBN does not fix FOREX rates for transactions by individuals or companies.

    “In line with our principle of transparency, we directed DMBs to forward to us evidence of FOREX sale to end users and to advertise same in national dailies.

    “We have recently observed, however, that some DMBs forwarded inaccurate data, which were erroneously published and gave a wrong impression of disparate rates.”

    “The DMBs involved in providing inaccurate data have since been issued queries accordingly.

    “Some have returned a response indicating that some of the figures were related to formatting errors, which do not affect the true rates of the affected transactions.

    “As the constitutionally authorised industry regulator mandated to manage the FOREX market, maintain external reserves and to safeguard the international value of the legal tender currency, we wish to state unequivocally that the CBN has a duty to perform and would not indulge in acts capable of discrediting the forex market.

    “We wish to reiterate that the sale of forex under the new policy is most transparent and it is not intended to benefit any individual or corporate body in anyway”, the statement said.

  • CBN insists on retaining current forex policy

    CBN insists on retaining current forex policy

    The Central Bank of Nigeria has insisted on retaining the current foreign exchange policy.

    The bank said no amount of criticism and blackmail from “self-centred individuals” would make it change the policy.

    In a statement on Thursday, titled: “Nigeria’s current economic situation: Our case,” signed by its Acting Director, Corporate Communications Department, Isaac Okorafor, the CBN said: “The Central Bank of Nigeria (CBN) has observed with great concern the continued and unwarranted attack on its policies by a group of Nigerians, whose real interests, findings have shown, are anything near altruistic but rather self-serving and unpatriotic.

    “While we respect the rights of every Nigerian or stakeholder to their respective views, we find it curious that certain interests have remained persistent in their move to misinform the larger public, with the intention of discrediting genuine efforts at managing the economy, thereby creating public distrust and panic within the financial system.

    “Indeed, self-centered individuals, who have failed to assail our patriotic position, have resorted to the sponsorship of serial propaganda to misinform and mislead the public on the objectives of our policies.

    “Intelligence reports at the disposal of the Bank reveal the involvement of some unpatriotic elements funding the push to have the CBN and the Federal Government reverse its FOREX policy, which is aimed at conserving foreign exchange, stimulating agriculture and manufacturing and also promoting exports.

    “The present economic challenges that we face have been worsened by our past practice of frittering away huge earnings made from oil sales, over the years.

    “As we have explained severally, our decisions on FOREX management are prompted by the challenge posed by the level of depletion of the country’s reserves, arising from issues such as a drastic reduction in oil earnings, speculative attacks and round tripping.

    “It is pertinent to note that pressures on the country’s foreign reserves have persisted due to a huge fall in the monthly foreign earnings, which fell from over US $3.2 billion sometime in 2013 to below $500 million per month sometime in 2016, when the demand for the US dollar, particularly by importers, continued to rise considerably.

    In spite of the challenges and the basic economic fact that countries earn dollars from international trade, we have ensured we meet the genuine demand of importers to pay for eligible imports and other transactions within available resources.

    “Furthermore, the Bank has continued to ensure that there is liquidity and transparency in the FOREX market.

    “For the avoidance of doubt, the Central Bank of Nigeria (CBN) continues to:

    i. Ensure that inflation remains within manageable limits;

    ii. Intervene in critical sectors of the economy, through injection of much-needed capital to promote growth and employment;

    iii. Promote export-driven industrialisation;

    iv. Provide access to credit to farmers and small scale entrepreneurs at single digit rates, to create wealth;

    v. Protect the interest of Bank customers in Nigeria; and above all,

    vi. Ensure that the masses of our country’s low income earners are protected from the vagaries of high naira depreciation.

    “Despite our positive efforts, some persons and groups have chosen to play to the gallery by focusing on negativity that does the country no good.

    “Nevertheless, in line with our mandate and working with the fiscal authorities, we will continue to ensure monetary and price stability as well as maintain external reserves to safeguard the international value of the Naira.

    “While leaving our doors open for genuine partnership with all our stakeholders, we will only take economic decisions that will impact positively on the lives of all Nigerians.

    “We therefore urge all concerned to be more patriotic and contribute to the soundness of the Nigerian economy; rather than engage in acts capable of undermining the efforts being made at moving the country out of the current economic situation.”

  • CBN retains 14% monetary policy rate, says economy still in recession

    CBN retains 14% monetary policy rate, says economy still in recession

    The Central Bank of Nigeria, CBN, on Tuesday allayed fears in some quarters when it unanimously resolved to retain all monetary rates.

    At the end of the Monetary Policy Committee meeting, the monetary policy rate for banks and businesses was retained at 14 per cent, while Cash Reserve Ratio (CRR) was left at 22.5 per cent and liquidity ratio at 30 per cent.

    The CRR sets the specified minimum fraction of customers’ total deposits commercial banks can hold as reserves either in cash or deposits with the Central Bank.

    At the post-MPC meeting briefing, the CBN governor, Godwin Emefiele, said in Abuja that the liquidity ratio was kept within the symmetric window of +200 and -500 basis points around the MPR.

    ThenewsGuru.com reports that the Central Bank Governor affirmed that the economy was still in recession. He however advised the government to fast track efforts to settle domestic indebtedness to states to help revamp the economy.

    He said part of the efforts should include attempts to revamp some moribund industries that helped create jobs in the past, to create employment opportunities for young university graduates.

  • CBN bans banking transactions using Bitcoin, other virtual currencies

    The Central Bank of Nigeria, CBN, yesterday, banned banks from any transactions in virtual currencies.

    Director, Financial Policy and Regulation department, CBN, Mr. Kelvin Amugo, who announced the ban said it was necessitated by money laundering and terrorism financing risks inherent in operations of virtual currencies.

    In a circular to banks and other financial institutions on virtual currency operations in Nigeria, Amogu stated: “The emergence of Virtual Currencies (VCs) has attracted investments in payments infrastructure that provides new methods of transmitting value over the internet.

    Exchange platforms

    “Transactions in VCs are largely untraceable and anonymous making them susceptible to abuse by criminals, especially in money laundering and financing of terrorism.

    VCs are traded in exchange platforms that are unregulated, all over the world. Consumers may, therefore, lose their money without any legal redress in the event these exchanges collapse or close business.

    “The development of VCs Payment Products and Services (VCPPS) and their interactions with other New Payment Products and Services (NPPS), give rise to the need for guidance to protect the integrity of the Nigerian financial system.

    There is, therefore, the need to address the Money Laundering/Terrorism Financing risks associated with VC exchanges and any other type of institutions that act as nodes, where convertible VC activities intersect with the regulated fiat currency financial system.

    “The attention of banks and other reporting financial institutions is hereby drawn to the above risks and you are required to take the following actions pending substantive regulation or decision by the CBN;

    Ensure that you do not use, hold, and /or transact in any way in virtual currencies;

    Ensure that existing customers, that are virtual currency exchangers, have effective AML/CFT controls that enable them to comply with customer identification, verification and transaction monitoring requirements;

    “Where banks or other financial institutions are not satisfied with the controls put in place by the virtual currency exchangers/customers, the relationship should be discontinued immediately; and any suspicious transactions by these customers should immediately be reported to the Nigerian Financial Intelligence Unit (NFIU).”

    The apex bank reiterated that VCs such as Bitcoin, Ripples, Monero, Litecoin, Dogecion, Onecoin, etc. and similar products are not legal tenders in Nigeria, thus any bank or institution that transacts in such business does so at its own risk.”

    The CBN ban is coming a week after the Securities and Exchange Commission (SEC) issued a warning against virtual currencies.

    The Commission had said in a statement last week, “the public is hereby advised to exercise extreme caution with regard to digital (crypto currencies) as a vehicle of investments.

    Given that these instruments and the persons, companies or entities that promote them have neither been authorized, nor any guidelines/regulations developed for them by any of the regulatory authorities in Nigeria, there is no protection available to users or investors in these virtual currencies from financial losses if the virtual currencies fail or the companies promoting them go out of business.”

     

     

  • Nigeria adopts N305 per Dollar as official exchange rate for 2017 Budget

    Nigerian lawmakers have adopted an official exchange rate of 305 naira per dollar for the 2017 budget but have asked the Central Bank of Nigeria (CBN) to initiate measures to close the 40 percent spread with the black market, deputy senate president said on Wednesday.

    Members of the upper house of parliament said during a review of the budget on Wednesday that they were worried about the exchange rate differential, which they described as damaging to the economy and said had led to a loss of investor confidence.

    “We are worried by the huge gap. The CBN needs to do something about it and stabilize the currency. We must find a way of bridging the gap and restore investor confidence,” deputy senate president, Ike Ekweremadu read out in the house.

    The naira’s official rate, controlled by the government, has hovered just above 300 to the dollar since it was devalued in June. But the gap, 40 percent stronger than the parallel market, is discouraging investment from overseas and leaving Nigeria starved of foreign currency.

    Echoing the senate’s concerns, Vice President Yemi Osinbajo said on Tuesday that Nigeria needed to close the gap “very soon”, as Africa’s largest economy grapples with inflation and the risks of devaluation.

    The official and black market naira foreign exchange rates will be “unified” this year, but there is no time frame for when it could happen, said Osinbajo.

    Financial institutions, among others, have argued that Nigeria must allow its currency to float freely to solve its foreign exchange woes, a measure which has met opposition from President Muhammadu Buhari.

    In an effort to step up the foreign currency shortfall, Buhari’s government has been in talks with financial institutions, including the World Bank, for loans.

    But those efforts to secure funds have stalled because Nigeria has not submitted the required economic reform plans, according to one of the banks and sources close to the matter.

  • CBN can’t stop inflation – Omisakin

    Dr. Olusegun Omisakin, the Head of Research, Nigerian Economic Summit Group (NESG), says rising inflation rate in the country has gone beyond the control of Central Bank of Nigeria (CBN).

    Omisakin made the observation in an interview with the newsmen on Monday in Lagos.

    Recall that the data released by the National Bureau of Statistics (NBS) on Jan.13 showed that December 2016 inflation rate stood at 18.55 per cent from 18.48 per cent in November.

    Inflation targeting is a major economic policy objective of CBN and this has been the focus of its Monetary Policy Committee (MPC).

    The apex bank, on July 26, 2016, increased the Monetary Policy Rate (MPR) by 200 basis points from 12 per cent to 14 per cent to check inflation.

    The CBN retained all key indicators at its September and November MPC meetings to keep MPR at 14 per cent, Cash Reserve Ratio at 22.50 per cent and the Liquidity Ratio at 30 per cent, all aimed at controlling inflation.

    Omisakin said that the rising inflation had defied CBN’s monetary policy measures, adding that policy tools adopted by the apex bank were only effective in taming inflation arising from demand-supply imbalances.

    “In this case, inflation is cost-push. Production cost is high because producers who want to import intermediate goods for production do not have access to foreign exchange.

    “Most of them go to the black market and definitely the product from this would be expensive, thereby increasing inflation.

    “The CBN cannot do anything through the monetary policy rate to arrest this inflation even if CBN increases the MPR to 20 per cent. Inflation would not come down.

    “The inflation we are experiencing now is out of the control of CBN. CBN can only address issues that have to do with availability and circulation of money and credit control.

    “CBN cannot address cost-push inflation because it cannot provide energy, roads, transport. There are fiscal issues,” Omisakin said.

    The economist urged the CBN to formulate policies that would boost industrial production and economic growth in view of the current economic recession.

    Omisakin called for coordination of fiscal and monetary policies to check the rising inflationary trend in the country.

    “The rising cost of food, transport and energy will reduce if the Federal Government creates concrete fiscal policies with effective implementation to address the situation through increased investment in infrastructure and agriculture,” he said.

    The expert said that speedy passage and effective implementation of the 2017 budget would stimulate economic activities.

     

     

    NAN