Nigeria naira quoted 18 pct weaker at investors’ FX window – Reuters

LAGOS, April 25 (Reuters) – The Nigerian naira was quoted 18.3 percent weaker for portfolio investors on Tuesday compared with the interbank rate, a day after the central bank said it would allow investors to trade the currency at market determined rates.

The naira was quoted at 374.25 to the dollar on the central bank’s new currency window, data on market regulator FMDQ OTC Securities Exchange showed. The naira was quoted at 305.95 on the interbank market and 385 on the black market.

The bank on Monday said it would allow investors to trade the naira at rates determined by the market, a move the regulator hopes will increase the amount of dollars available .

The stock market, which has languished as foreign investors fled, welcomed the new central bank window, gaining 0.2 percent in early trade on Tuesday after rising more than 2 percent at its previous session.

With the move, Nigeria now has at least six exchange rates: the new rate, the official rate, the black market, a rate for Muslim pilgrims going to Saudi Arabia, a retail rate set by licensed exchange bureaus and a rate for foreign travel and school fees.

Analysts say the policy has masked pressures on the naira as the central bank tries to avoid devaluing its official rate for the currency.

The central bank last year removed a temporary peg on the currency, but to protect its precariously low foreign reserves it introduced a convoluted exchange rate system that sees different buyers paying various rates for dollars.

It has been using the forward market to meet demand for dollars, making only tiny volumes available on the spot market and using those sales to influence the naira’s official value. (Reporting by Chijioke Ohuocha; Additional reporting by Oludare Mayowa; Editing by Larry King)

 

Naira drops to 390/dollar, CBN sells fresh $246m – Punch

Oyetunji Abioye

The naira reversed some of the gains it recorded last week, closing at 390 against the United States dollar on the parallel market on Monday.

The local currency had closed at 380/dollar on Friday.

The naira has been hovering between 380/dollar and 410/dollar in the past two weeks as the Central Bank of Nigeria continues to intervene in the foreign exchange market to stabilise the exchange rate.

The interventions are aimed at narrowing the spread between the official and black market rates of the naira against the dollar.

The CBN has sold around $4bn since intervention began in February, according to analysts.

After touching an all-time-low of 520/dollar in February, the CBN had increased forex supply into the market to enhance the naira.

As a result, the naira appreciated to 375/dollar in March. However, following some speculative activities and other market dynamics, the local currency fell to 410/dollar two weeks ago.

Last week, the naira reversed the loss and rose to 380/dollar after the CBN increased forex supply.

Meanwhile, the CBN offered the sum of $246.2m to authorised dealers at the forex auction in the interbank wholesale window, the Small and Medium-scale Enterprises and invisibles’ segments on Monday.

A breakdown of the total offer indicates that the sum of $150m was auctioned at the wholesale window while the SMEs and invisibles got $52m and $44.2m, respectively.

The bank’s spokesman, Mr. Isaac Okorafor, confirmed the offer and sales, stating that the forwards sales would be concluded in the days to come.

He, however, added that the CBN would continue its weekly sale to dealers in the Bureau de Change segment this week in order to guarantee onward sale to end users.

He said, “The SME operators no longer have to patronise or source foreign through unofficial windows and no more pressure on either the BDCs or any other unofficial source with the opening of the special window.”

CBN must scrap multiple exchange rates, says Soludo – Punch

Oyetunji Abioye

A former Governor of the Central Bank of Nigeria, Prof. Chukwuma Soludo, on Monday highlighted steps the Federal Government needed to return the country out of the biting economic challenges and get back on the path of growth.

Soludo said policymakers must get the country out of the current multiple exchange rates’ regime and reduce the wide spread between the official and parallel market exchange rates of the naira to a maximum of three to five per cent.

The currency currently has about five exchange rates, according to analysts.

The former Governor of the Central Bank of Nigeria, who was the Chairman of the Economic Discourse organised by the Institute of Chartered Accountants of Nigeria, spoke in Lagos while fielding questions from journalists shortly after the event.

He pointed out that policymakers were expected to be taking bold steps that would navigate the country away from crude oil dependency to a non-oil economy on the long run.

Soludo commended steps taken by the CBN in the last few weeks to restructure the foreign exchange market, but stressed that there was still a long way to go to get the economic back on track.

The former CBN governor stated, “With regards to exchange rate, I can see quite some changes in the last few weeks. I think some steps are beginning to be taken, but it is still quite a long way to go to get to a stable and predictable level that eliminates the premium among the multiplicity of exchange rates.

“Nigeria must get out of multiple exchange rates and we must eliminate the premium, get it back on track at a competitive exchange rate regime. The uncertainty that is created by that is so enormous; and with the oil price rising and with the increase in oil earnings, this is the time to take bold steps and do the needful.”

On how policymakers can eliminate the multiple exchange rates and close the gap, Soludo said it was simple because the nation had done it before.

He said, “On bold steps, the template is not too far. We have done it before and it is just going back to it. If it (the template) is not broken, why mend it? Get back and eliminate the multiple exchange rate regime, eliminate the premium, or at least significantly reduce it to not more than between three to maximum of five per cent premium between the parallel and official exchange rates.

“On what it takes to do it, that is basically known. Get the public finance okay; I can tell you that with the momentum of what is going on in the rest of the world, by the end of this year, we should actually be having stocks of reserves in the range of about $50bn or $60bn.”

According to Soludo, getting the country out of the current economic recession is no big deal as bringing it back to growth.

He said in spite of government policies, the country would come out of the current recession.

He stated, “And getting Nigeria structured and reengineered towards non-oil economy, that again will require a lot more serious work. The recession is not the issue. We will get out of it in spite of government policy.

“I think this is a time Nigeria should actually be making hard decisions to transit away from an oil revenue economy. And that’s the serious work.”

Earlier, the ICAN President, Mr. Titus Soetan, had said that years of neglect and mismanagement had brought the country to its present parlous state.

Highlighting the purpose of the ICAN Economic Discourse, he said, “We took a stance that the challenges confronting us needed to be identified and articulated so that short, medium and long-term solutions could be found for them.

“This is what we sought out to do by inviting experts in various fields to this discourse. We need to hear from people who have the knowledge and expertise and who can share their wealth of experience on how to move on economically as a nation in view of the urgent need to reinvent the economic wheel of the Nigerian economy.”

The Managing Director, Financial Derivatives Company Limited, Mr. Bismarck Rewane, who was the guest speaker at the event, stated that the nation’s Gross Domestic Product would expand this year by 2.19 per cent and it would go through a stage of 4.62 per cent before getting to seven per cent by 2020.”

He, however, noted that this would be based on the assumptions that Nigeria would remain an exporter of oil, produce 2.5 million barrels of oil per day, and create six million jobs within the period.

“It also means we will increase the overall tax to GDP ratio, which is about five per cent now, to about 15 per cent, and the tax policy will be more efficient and the revenue will increase  to about N350bn annually,” Rewane added.

The panellists at the event were the Managing Director of Economics Associates, Dr. Ayo Teriba; Director-General, Lagos Chamber of Commerce and Industries, Mr. Muda Yusuf; a former Deputy Governor, CBN, Dr. Obadiah Mailafia; and Partner, PwC, Mr. Taiwo Oyedele.

Teriba, in his submission, noted that the Economic Recovery and Growth Plan of the Federal Government was triggered by the shocks occasioned by the recession and worsening of the inflation record.

He said, “Nigeria’s economic crises broke out in the course of 2016. We also had foreign exchange crisis, which broke out also in 2016. Perhaps, we should have separated the crisis response from the plan. Crisis response calls for urgency. Mid last year, the currency was devalued. So, we needed the crisis response, we don’t have the luxury.

“In economic policy, there are lags. Lags are well understood. After recognising there is a response lags, what should now be fashioned is the response. There is an action lag. When you have a recession and devaluation, you want to do your best to shorten the lags. Yusuf emphasised the need for the Federal Government to anchor its growth plans on the private sector, emphasising the role of private investments in economic growth.

Mailafia also stressed the importance of a conducive business environment to attracting foreign investors into the country in order to enhance growth.