TheNewsGuru

Tag: Forex

  • Forex: CBN injects $210m into market, warns banks against hoarding

    …Urges customers to report erring banks

    The Central Bank of Nigeria (CBN) has made available 210 million dollars to meet customers’ requests in various segments of the foreign exchange market, Mr Isaac Okorafor, the acting Director, Corporate Communications, CBN, said in a statement.

    Okorafor stated in the statement on Wednesday in Abuja that CBN offered 100 million dollars to authourised dealers in the wholesale segment of the market.

    He noted that the Small and Medium Enterprises (SMEs) segment got an allocation of 55 million dollars.

    He added that customers needing foreign exchange for invisibles such as tuition fees, medical payments and Basic Travel Allowance (BTA), among others, were also allocated 55 million dollars.

    He stated that “CBN has reliably gathered that some banks are turning back customers that come to purchase BTA/PTA and Foriegn Exchange for pilgrimage.

    “We hereby appeal to bank customers to go straight to their banks to buy forex as the CBN has supplied enough dollars to banks to meet needs in the invisible segment.

    “Customers are hereby enjoined to report any bank that refuses to attend to their legitimate demands within 24 hours. Please call 07002255226,” he said.

    Okorafor stated that the commitment to continue to intervene in the interbank foreign exchange market was in line with pledge to sustain liquidity in the market and maintain stability.

    He said the CBN would sustain its strategic management of the foreign exchange market with a view to reducing the country’s import bills and halt depletion of its foreign reserves.

    The CBN on Friday intervened in the market to the tune of 293 million dollars to cater for requests in the retail segment of the forex market.

    Meanwhile, the Naira continued its stability in the market, exchanging at an average of N363 to a dollar in the Bureau De Change segment of the market.

  • CBN to sanction non-compliant exporters of Forex

    The Bankers’ Committee on Tuesday announced the commencement of sanctions against exporters who fail to repatriate foreign exchange (forex) proceeds from their business into the economy.

    The sanctions will be implemented by the Central Bank of Nigeria (CBN).

    Addressing newsmen at the end of the Bankers’ Committee meeting in Lagos, Citibank Nigeria Managing Director/CEO Akin Dawodu spoke of a provision in the Central Bank of Nigeria (CBN) Foreign Exchange Manual that mandates all exporters to repatriate export proceeds back to the country to support the local currency and the economy.

    There is a 90-day grace period during which all proceeds from non-oil exports must be repatriated to the country and all arrears cleared. Dawodu said after the moratorium, non-compliant exporters will be blacklisted and banned from accessing banking services as well as forex from the CBN.

    He said repatriating export proceeds will boost Nigeria’s balance of trade.

    Also speaking, CBN Director, Banking Supervision, Abdullahi Ahmad, said the apex bank is monitoring non-oil exporters and assessing compliance levels. “The period of grace is gone and now is the time for heavy sanctions against defaulters. Defaulters will be banned from accessing banking services,” he said.

    Nigeria’s foreign exchange reserves have hit $42 billion, according to Ahmad, who added that the economy remained at its lowest risk rating at present.

    “Nigeria’s capital market is the best in the world; inflation has been coming down, even as Gross Domestic Product (GDP) growth is expected to be sustained above two per cent,” he said.

    External reserve was $40.4 billion as at last December. The last time the foreign reserves hit the $40 billion mark was January 2014, about five months before the crash in global oil prices. In September 2008, the country’s foreign exchange reserves hit $62 billion, with the Federal Government spending $12 billion from it to settle external debts.

    FSDH Merchant Bank Managing Director Mrs. Hamda Ambah said the Bankers’ Committee also adopted a unified rate N360/$ for all Personal Travel Allowances (PTAs), Basic Travel Allowances (BTAs), school fees and transactions without commission.

    She said the committee also urged bank customers to report any defaulting lender for appropriate sanctions. The banks are to buy dollar from the CBN at N357/$1 and sell to end-users at N360/$1.

    According to the CBN manual, proceeds of oil and non-oil exports are to be repatriated into the export proceeds domiciliary accounts of their exporters’ accounts within 90 days for oil exports and 180 days for non-oil exports. Where this policy is violated, the collecting bank will be liable to a fine of 10 per cent of the Free On Board value of the transaction, including other appropriate penalties as provided in the Banks and Other Financial Institutions Act (BOFIA).

    Likewise, where the exporter fails to repatriate the proceeds into the domiciliary account within the stipulated period, the exporter will be barred from participating in all the segments of foreign exchange market in Nigeria.

    Ahmad said many exporters, who benefited from Federal Government support scheme, have continually failed to comply with this directive. The defaulters will be barred from accessing other banking services.

    To Ahmad, since the CBN is taking strategic steps to ensure that Nigerian exporters’ businesses thrive, not sending earned dollar back to the economy is not proper.

     

  • Forex: Market gains stability as CBN injects $210m

    The various segments of the currency market in the country gained stability last week as the Central Bank of Nigeria (CBN) put another $210 million into the market to sustain flow of forex to meet demands of customers.

    According to a weekly report released by Cowry Asset, the Naira strengthened against the US Dollar at the Investors & Exporters Forex Window (I&E FXW) by 0.09 percent to N360.10/$ week-on-week (w-o-w).

    However, at the Bureau De Change (BDC) and the interbank foreign exchange market segments, the local currency closed flat at N361/$ and N330/$ respectively.

    But at the parallel (black) market segment, the Nigerian legal tender depreciated by 0.28 percent to N364/$.

    During the week, the apex bank released $100 million to the Wholesale (SMIS) segment, $55 million to Small and Medium Scale Enterprises sector, and $55 million for invisibles.

    Meanwhile, all dated forward contracts at the interbank over-the-counter (OTC) segment appreciated on sustained increase in the foreign exchange reserves – spot rate, 1 month, 2 months, 3 months and 6 months contracts appreciated w-o-w by 0.03 percent, 0.08 percent, 0.16 percent, 0.31 percent and 0.30 percent to close at N305.70/$, N363.93/$, N367.82/$, N371.75/$, and 386.50/$ respectively.

    As the global crude oil prices retains upbeat, which should result in further build-up in foreign reserve, the Naira is expected to sustain stability this week.

     

  • CBN injects $210m into foreign exchange market

    CBN injects $210m into foreign exchange market

    The Central Bank of Nigeria (CBN) has injected another 210 million dollars into the inter-bank Foreign Exchange Market to meet customers’ requests in various segments.

    Giving a breakdown of the intervention, the bank’s acting Director, Corporate Communications, Mr Isaac Okorafor on Monday in Abuja said that 100 million dollars was offered to authorised dealers in the wholesale segment of the market.

    He said that the Small and Medium Enterprises (SMEs) segment received the sum of 55 million dollars.

    Also, customers requiring foreign exchange for tuition fees, medical payments and Basic Travel Allowance (BTA), among others were allocated the sum of 55 million dollars.

    Okorafor said also that bidders who made bids in the wholesale window would receive value for the bids on Tuesday.

    He reassured the public that the CBN would continue to intervene in the interbank foreign exchange market in line with its resolve to sustain liquidity in the market and maintain stability.

    According to him, the steps taken so far by the CBN in forex management had yielded many positive results, particularly as it had to do with reduction in the country’s import bills and accretion to its foreign reserves.

    It will be recalled that the CBN last Friday, intervened in the Retail Secondary Market Intervention Sales (SMIS) to the tune of 262.5 million dollars, to cater for requests in the agricultural, airlines, petroleum products and raw materials and machinery sectors.

    Meanwhile, the naira continued its stability in the FOREX market, exchanging at an average of N360 to a dollar in the Bureau De Change segment of the market.

     

  • Forex: BDCs beg CBN to sell Naira at N350/$1

    Forex: BDCs beg CBN to sell Naira at N350/$1

    Some Bureau De Change (BDC) operators under the aegis of Association of Bureaux De Change Operators of Nigeria (ABCON) have appealed to the Central Bank of Nigeria (CBN) to reduce foreign exchange (forex) buying rate from N360 to N350 to the dollar.

    President of the Association, Aminu Gwadabe made the appeal on Wednesday after an emergency meeting with 3,500 CBN-licensed BDCs in Lagos. He explained that the operators’ businesses may go underground unless the CBN listens to their demands.

    He said small transaction margins charged by BDCs are not sufficient to keep their operations going, with many operators running at a loss and unable to pay their workers’ salaries.

    Gwadabe, who was represented by ABCON National Treasurer, Gbadamosi Moh-Murtala, said the CBN has also been informed on the need to change the commission on transaction of BDCs from N2 to 3.5 per cent of the transaction volume for the sustainability of their businesses.

    “We are happy that the exchange rate is appreciating. The major problem now is how BDCs can operate without making losses. Many of the BDCs are buying at higher prices and selling lower prices. They sometimes sell below CBN’s rate which is N360 to dollar. That is not event enough to cover overhead left alone profit,” Gwadabe said.

    According to the ABCON boss, the CBN should at the meantime, peg the BDCs buying rate at N358 to dollar to enable them sell at N360 to dollar while it works on longer-term plan of cutting the rate to N350 to dollar and allow them sell at N355 to dollar.

    He said the challenges faced by BDCs are enormous, as many forex users now prefer to buy their Business Travel Allowances (BTA), Personal Travel Allowances (PTAs), medical bills and school fees payment abroad through the banks instead of BDCs following the rate disparity that does not favour the BDCs. He added that the CBN could also, sell dollar to BDCs at same rate it sells to banks, since both sell to the same customers.

    He added: “Even the CBN knows that we are making losses. We are currently out of the market but we have decided not to boycott the market despite the challenges we face. It is better we dialogue. Our body language is to support government policy but while we are doing that, we want the CBN to lower our buying rate”.

    Gwadabe said the BDCs helped the government reduce unemployment rate, adding that any policy that pushes the BDCs out of the market will worsen the unemployment rate in the economy.

    He said the ABCON is also working closely with the CBN to ensure that more sources of forex to the BDCs are explored, especially in getting them to buy export proceeds.

    He however, urged operators to be transparent in their operations and file their returns accurately as such would encourage the CBN to support their operations.

    He also said the group is collaborating with the Nigerian Interbank Settlement System and the CBN to automate BDCs’ processes to enhance transparency. He said the BDCs’ can begin to access dollar from International Money Transfer Operators (IMTOs) directly if the right technology exists. “The automation allows NIBSS to confirm international passport and Bank Verification Number (BVN) authenticity of forex buyers. At ABCON, security of transactions remain our priority,” he said.

    He also said the CBN will be urged to allow operators up till March 31, to pay N250,000 annual licence renewal fee instead of the January 31 deadline set by the regulator.

    Gwadabe said the CBN and Travelex would need to take steps to ensure that the weekly forex disbursements are done on time for the security of their members. “We have told our members to reject any dollar disbursement after 3pm on the selling day. Once it is 3pm, we will abandon the money for Travelex because the security of our members is paramount,” he said.

    The ABCON boss said the group will continue to align with the CBN’s vision of providing a stable framework for the economic development of Nigeria through effective, efficient, and transparent implementation of monetary and exchange rate policy, and management of the financial sector.

  • Forex deals: CBN threatens to blacklist exporters withholding proceeds

    The Central Bank of Nigeria (CBN) has threatened to sanction exporters who fail to repatriate foreign exchange (forex) proceeds from their businesses into the economy.

    The apex bank issued the warning through its director, banking supervision, Abdullahi Ahmad during the Bankers’ Committee meeting in Lagos on Thursday.

    Ahmad spoke of a provision in the CBN Foreign Exchange Manual that mandates all exporters to repatriate their proceeds back to the country to support the local currency and the economy.

    The manual stipulates that proceeds of oil and non-oil exports are to be repatriated into the export proceeds domiciliary accounts of their exporters’ accounts within 90 days for oil exports and 180 days for non-oil exports. Where this policy is violated, the collecting bank will be liable to a fine of 10 per cent of the Free On Board value of the transaction, including other appropriate penalties as provided in the Banks and Other Financial Institutions Act.

    Likewise, where the exporter fails to repatriate the proceeds into the domiciliary account within the stipulated period, the exporter will be barred from participating in all the segments of foreign exchange market in Nigeria.

    Ahmad said many exporters, who benefited from Federal Government’s support scheme, continually failed to comply with this directive, adding that the defaulters would be barred from other banking services.

    He said the CBN had continued to take strategic steps to ensure that Nigeria exporters’ businesses thrived and that not sending earned dollar back to the economy was not proper.

    He said the Gross Domestic Product (GDP) growth of 0.5 per cent, which brought the country out of recession, needed to be improved on, and called for more hard work to achieve better growth for the economy.

    The stability in the foreign exchange market, moderation in inflation and capital market recovery are indications that the economy is getting better, Ahmad said.

    Also speaking at the meeting, the Managing Director/CEO of Unity Bank, Mrs. Tomi Somefun said the disbursement of N26 billion special fund for players in the agricultural sector would begin at the end of this quarter. The fund, first announced in June, was part of the banks’ plan to finances agro-based small and medium scale enterprises (SMEs).

    The contribution follows the directives of the CBN to all commercial banks to remit five per cent of their annual after-tax profit in support of a scheme as part of the guidelines for the Operations of the Agricultural/Small and Medium Enterprises Investment Scheme (AGSMEIS). The programme was first approved at the 331st Bank’s Committee meeting, held on February 9th this year.

    The Managing Director/CEO of Union Bank, Mr. Emeka Emuwa who also spoke at the meeting said the Bankers’ Committee was also worried about the return of ponzi scheme- Mavrodi Mundial Moneybox (MMM).

    He said such schemes always thrived when the end of the year approaches. “The Ponzi schemes are back and more about them as the year comes to an end,” he said.

    According to the Union Bank boss the CBN has instituted the collateral registry to help SMEs access funds, and create more jobs. “The Collateral Registry is going to facilitate lending to the SMEs and also boost employment,” he said.

    The Bankers’ Committee praised the CBN for the stability achieved in the foreign exchange market, adding that the apex bank had been steadfast in executing its policies.

     

  • Lagos accounts for over 90 percent of Nigeria’s forex inflows – Finance Commissioner

    The Lagos State Commissioner of Finance, Mr. Akinyemi Ashade has said the state controls over 90 percent of foreign exchange inflows into the country.

    Ashade said this in a presentation made to capital market stakeholders in Lagos titled: ‘Funding Lagos State Government’s Economic Agenda through Debt Capital Market’.

    The finance commissioner noted that with over 23 million residents, the state is now the most populous city in Africa.

    Ashade described the city as Africa’s fastest growing market and the fifth largest economy on the continent, contributing over 30 percent of Nigeria’s Gross Domestic Product.

    “Lagos State accounts for over 90 percent of Nigeria’s forex inflows,” he stated.

    He added, “We have explosive increase in population at five percent per annum; 123,000 people migrate to Lagos daily.

    “Current demand for trips in Lagos metropolitan area by all modes (including walking) is approximately 18 million per day, with over seven million public transport passenger trips per day.

    “The rapid increase in population and standard of living is forecasted to bring the daily demand for trips to approximately 30 million per day by 2020.”

    According to him, 10,000 metric tonnes of waste are generated daily in the state, and the state is by far the largest consumer of power in Nigeria as the Ikeja and Eko distribution zones alone account for over 50 percent of the total electricity consumption in the country.

    On the immediate financing need of the state, he said Lagos’ 2017 budget had N500bn ($1.6bn) as capital expenditure.

    The commissioner explained, “Infrastructure needs analysis shows that over $30bn will be required to achieve the 30 most impactful projects over the next five years (an average of $6bn per annum).”

  • Forex: CBN boosts market with $195m ahead of MPC decisions

    …as Naira exchanges for N363/1$ at the parallel market

    The Central Bank of Nigeria (CBN) on Monday boosted the Foreign Exchange (Forex) market by offering a 195 million dollars in three segments of the Forex market.

    The acting Director of Corporate Communications, Mr Isaac Okorafor, in a statement, said it auctioned 100 million dollars at the wholesale Secondary Market Intervention Sales (SMIS) window of the inter-bank Foreign Exchange market.

    He said that the apex bank also intervened in the Small and Medium Enterprises (SMEs) and invisible segments, with 50 million dollars and 45 million dollars.

    Okorafor reiterated that the Bank’s intervention was to maintain its commitment to sustain liquidity in the market to meet genuine requests as well as deepen flexibility in the foreign exchange market.

    He said the CBN would continue to work on achieving the objective of convergence of rates in the various segments of the market, and would continue to strive that the forex market guaranteed transparency in the sale of foreign exchange.

    Okorafor said only last week, the CBN threatened to sanction any Deposit Money Bank (DMB) in breach of its earlier directive of March 3.

    The directive instructed them to, among other things, open teller points for retail Forex transactions and to have electronic display boards in all their branches, showing rates of all trading currencies.

    He said the bank’s firm position was to reiterate its commitment to ensure liquidity in the foreign exchange market, where all genuine requests would be met in line with extant forex guidelines, noting that it would foster more transparency and make the public become aware that the facilities existed.

    This week’s intervention is significant, coming in the midst of the Monetary Policy Committee Meeting taking place on Monday and Tuesday.

    Monday’s sale follows the major intervention, last week, to the tune of 545 million dollars as the retail Secondary Market Intervention Sales (SMIS) received the largest intervention of 285 million dollars.

    Other segments include the 100 million dollars offered for wholesale SMIS, 90 million dollars for Small and Medium Enterprises (SMEs) window and 70 million dollars for invisibles such as Basic Travel Allowances, tuition fees and medical payments.

    TheNewsGuru.com reports that the Naira on Monday closed at N363 to a dollar, N485 to the Pound Sterling and N433 to one Euro at the parallel market.

     

  • Forex: CBN launches e-CCI for transparency, efficiency

    As part of deliberate administrative efforts to ensure transparency, efficiency and accountability in the foreign exchange market, the Central Bank of Nigeria, CBN has instructed banks and other authorized dealers to implement electronic Certificate of Capital Importation (eCCI) for foreign investors.

    TheNewsGuru.com reports that the Certificate of Capital Importation is given to foreign investors to confirm the level of investment they have brought into the country. The certificate has always been on hard copy until this policy shift.

    The eCCI implementation, which takes effect from Monday is expected to boost transparency and enhance confidence of foreign investors in the local market. The foreign investors constitute about 70 per cent of the total transaction turnover in the capital market.

    The eCCI would enable foreign investors to easily find out the status of their investments in the country, increase transaction efficiency and ensure that investors get adequate returns on their investments.

    In a circular to all authorised dealers, CBN Director, Trade and Exchange Department, W.D. Gotring, said: “In a bid to enhance transparency and efficient processing of foreign investment flows to the country, the CBN informed all authorized dealers and the public of the deployment of electronic Certificate of Capital Importation (eCCI) platform”.

    Continuing, he said the eCCI shall replace the hard copy of CCI normally issued in respect of all capital inflows either in form of cash or machinery/ equipment.

    “The policy, takes effect from tomorrow, meaning that from this date, processing of all Certificate of Capital Importation in Nigeria shall only be done electronically on the eCCI platform,” he added.

  • Forex: Monthly demand rose from N12bn to N588b in 2 years – CBN

    The Central Bank of Nigeria, CBN has said despite the drop in forex earning by the Federal Government, the demand for it (forex) has continued to rise.

    The CBN Governor, Godwin Emefiele said on Tuesday that the average monthly import bill rose from N12.4 billion in 2005 to N588.1 billion in the first five months of 2017.

    Speaking in Lagos at the 2017 Annual General Meeting of the Nigerian Bar Association (NBA), Emefiele said the import bill rose despite the significant reduction in inflow of dollars, caused by the sharp drop in oil prices.

    He said the CBN witnessed a significant decline in forex inflow and reserves from about $42.8 billion in January 2014 to about $23.7 billion in October 2016 before recovering to slightly over $30 billion today.

    Acccording to him, in terms of inflow, the bank’s forex earnings fell from as high as $3.2 billion monthly sometime in 2013 to as low as $580 million per month at some point.

    Although Emefiele did not give reasons for the rise in the import bill, it may not be unconnected with Nigerians’ love for imported goods or increased production in the manufacturing sector.

    “Despite these outcomes, the demand for forex has risen significantly. For example, in 2005 when we had oil prices at about $50 per barrel for an extended period of time, our monthly average import bill was N12.4 billion. In stark contrast, the average import bill in the first five months of 2017 is about N588.1 billion per month,” he said.

    He said the combined effects of the aforementioned exogenous shocks, especially the fall in oil prices and the capital flow reversals due to monetary policy normalisation in the United States, compelled several depreciations of the Dollar-Naira Exchange Rate.

    He said the negative effect of high inflation and exchange rate volatility have prompted the CBN to tackle both developments head-on.

    He noted that high inflation hinders economic growth and is not only harmful to growth in the long run, it discourages saving and inhibits planning and investment as people become more skeptical on the direction of prices of goods and services.

    Emefiele, who spoke on the theme: “The dilemma of monetary policy during a recession: Potential Options for Nigeria”, said achieving low inflation is a major priority of the CBN, adding that any decision it takes on the economy usually has certain repercussions.

    He said the naira depreciated from $1/N155 in June 2014 to as high as over $1/N500 in the parallel market around February 2017 adding that the country is also dealing with the perennial problem of high interest rates in Nigeria. The naira exchange rate against the dollar has however improved after the CBN introduced the Investors & Exporters forex window.

    “If we had chosen to reduce interest rates and increase money supply, we would have further deepened the recession, while assuring foreign investment outflows which would worsen foreign exchange reserves accretion,” he said.

    He said faced with the need to tackle high inflation, the correct monetary policy would be to tighten money supply either by increasing the Cash Reserve Requirement (CRR) of banks, mopping up money through increased Open Market Operations, or raising the Liquidity Ratio of Banks.

    However, while doing any or a combination of these would help moderate inflationary pressure, it could ensure that interest rates remain high and may even be inimical to restoring economic growth in the short term.

    However, if the CBN were to abandon its pursuit of low inflation and decide to implement expansionary Monetary Policy to engender rapid economic growth, the outcome for inflation would be much worse. He said expansionary monetary policy would require reducing the CRR and Liquidity Ratios and increasing money supply through purchase of Bonds and Treasury Bills.

    The CBN has maintained a tight monetary policy to contain rising inflation and encourage forex inflow into the country.

    “Although we made some progress from these initial policies, the pressure on the forex markets continued to swell. With the rate at N197/$1 and the premium vis-a-vis the unstructured markets widening, there were indications that autonomous forex suppliers were hesitant as they perceived the pricing to be inappropriate,” the CBN boss said.

    He said the introduction of a more flexible exchange rate regime with a view to eliminating forex market pressure, buoy autonomous forex inflows, and preserve the forex reserves. Also, to support small-scale users and encourage increased forex inflow from diaspora remittances, the Bank undertook the licensing of International Money Transfer Organisations (IMTOs).

    “More importantly, however, in order to further extricate the lingering bottlenecks, increase transparency and boost supply in the forex market, the CBN, in April 2017 introduced the special Investors’ and Exporters’ (I&E) FX Window. The establishment of that special (I&E) window has tremendously facilitated market driven transactions and has catered for the FX needs of investors and exporters. As a result, we have seen an appreciably improved FX supply due to the introduction of the window,” Emefiele said, adding that $4.7 billion of foreign exchange inflow had been recorded through this window since April 2017.

    He said he was unaware of the seeming unpopularity of some decisions taken by the CBN.

    Developments in the international oil market exposed the fundamental vulnerabilities of oil exporting countries, such as Nigeria, as commodity exporting countries generally endured unfavorable conditions.

    “We saw the average price of crude oil fall by nearly 60 percent from $114 per barrel in June 2014 to $28 per barrel in February 2016, before recovering to about $50 per barrel today. These resulted in a dwindling of our overall economic fortunes, as net inflows tapered and pressures escalated in critical financial markets,” he said.

    He said available data indicated that Nigeria’s Gross Domestic Product (GDP) contracted by 1.6 per cent in 2016 compared with a growth of 6.2 per cent in 2014, and 2.8 per cent in 2015. Also, within this period, the economy, he said, witnessed sharp increases in inflation rate, reflecting supply constraints, exchange rate depreciation, and adjustments to energy prices.

    Emefiele said inflation rate rose persistently from 9.2 per cent in July 2014 to 18.7 per cent in January 2017.