Naira drops to 381/dollar despite CBN’s $205m offer – Punch

Oyetunji Abioye

The naira depreciated slightly from 380 per United States dollar to 38i/dollar on the parallel market on Monday.

This came despite a $205m dollar injection into the foreign exchange market by the Central Bank of Nigeria.

In a statement on Monday, the CBN said ahead of the outcome of the Monetary Policy Committee meeting in Abuja, it had injected over $205m into the foreign exchange market.

A breakdown of the intervention indicated that the sum of $100m was released for the wholesale segment of the market for both spots and forwards.

Also, Basic Travel Allowance which comes under invisibles segment garnered $50m while the Small and Medium-scale Enterprises segment got $55m.

The Acting Director, Corporate Communications, CBN, Mr. Isaac Okorafor, said the newly created ‘Investors and Exporters FX Window’ had so far recorded a trade volume in the sum of $1.1bn from both the CBN and autonomous windows.

This, he said, was an indication of the appreciable level of confidence in the forex management by foreign investors and autonomous suppliers of foreign exchange to the market.

The naira, which hovered around 390/dollar about two weeks ago, has continued to appreciate on the back of continued forex injection by the CBN.

Market analysts have encouraged the CBN to continue with the latest forex policy measure.

Nigeria raises interest on unpaid taxes to try to discourage evaders – Reuters

ABUJA May 22 (Reuters) – Nigeria will increase the interest rate on unpaid taxes to discourage companies and individuals from paying late and racking up a larger debt, the finance ministry said on Monday.

The ministry said the measure will take effect on July 1 and that the rate would be five percent over a central bank rate known as the Minimum Rediscount Rate, a benchmark lending rate.

“The review of the interest rates on unpaid taxes was one of the necessary measures adopted by the Federal Government to enhance tax compliance, minimize tax evasion and deter late payments,” the finance ministry said in a statement.

Economists have long criticised the low levels of tax in Africa’s largest economy and in March the Abuja government laid out plans to increase its overall tax to GDP ratio to 15 percent by 2020 from 6 percent now.

Among plans, the OPEC member seeks to improve tax collection, targeting an annual tax revenue of 350 billion naira ($1.15 billion) a year and proposes hiking a luxury goods tax to 15 percent from 5 percent. ($1 = 305.4000 naira) (Reporting by Camillus Eboh; Writing by Paul Carsten; editing by Richard Lough)

 

Saudi Arabia, Iraq agree oil output cut needs 9-month extension – Reuters

* First visit by top Saudi oil official to Iraq in 30 years

* Saudi, Russia pushing for nine-month extension to cuts

* Goldman says stocks should normalise if cuts prolonged 

By Ahmed Rasheed and Ernest Scheyder

BAGHDAD/VIENNA, May 22 (Reuters) – OPEC heavyweights Saudi Arabia and Iraq agreed on Monday on the need to extend a global cut in oil supply by nine months in an effort to prop up crude prices, removing a potential stumbling block as producing countries prepare to meet this week.

Saudi Energy Minister Khalid al-Falih said he did not expect any opposition within the Organization of the Petroleum Exporting Countries to extending the curbs for a further nine months, speaking after he met his Iraqi counterpart in Baghdad.

OPEC meets in Vienna on Thursday to consider whether to prolong the original deal reached in December in which OPEC and 11 non-member countries, including Russia, agreed to cut output by about 1.8 million barrels per day in the first half of 2017.

The Saudi minister told a joint news conference with his Iraqi counterpart Jabar Ali al-Luaibi that Iraq had given the “green light” to a proposal for a nine-month extension that would be presented to the meeting in the Austrian capital.

He said a new agreement would be similar to the previous pact, with minor changes. He said any decision would not be finalised until OPEC meets.

Falih was paying a rare visit to Iraq in the latest effort by the top oil producer to convince its fellow OPEC member to extend supply cuts to ease a global glut.

Iraqi Oil Minister Jabar Ali al-Luaibi said he agreed with Saudi Arabia on the need for a nine-month extension.

Saudi Arabia and non-OPEC Russia have been pushing to extend the cuts from the end of June until March 2018. Iraq, OPEC’s second-largest and fastest-growing oil producer, had until Monday voiced support only for a six-month extension.

It is the first time in nearly three decades that a senior Saudi energy official has visited Baghdad.

OPEC wants to reduce global oil inventories to their five-year average but so far has struggled to do so. Stockpiles are hovering near record highs, partly because of rising production in the United States, which is not part of the existing deal.

“I believe we have a growing consensus (on the duration of cut extension),” OPEC’s Secretary-General Mohammad Barkindo told reporters in Vienna.

Iraq and Iran were the main stumbling blocks for OPEC in reaching its last output-cutting decision in December.

OPEC’S CHALLENGE

Baghdad argued it had just started enjoying production growth after years of stagnation and Tehran said it needed to raise output after the lifting of Western sanctions.

Iraq ended up agreeing to cap output in the first half of 2017 while Iran was allowed a slight rise in production.

Nigeria and Libya were granted exemptions from cuts as their output suffered from unrest. Both have regained some volumes in recent months and are expected to add more soon, adding to OPEC’s challenge in rebalancing the market.

Goldman Sachs, one of the most active banks in commodities trading, said on Monday a nine-month extension would help rebalance inventories in 2017 and keep Brent prices near $57 per barrel.

Brent futures were trading 0.6 percent higher at $53.92 a barrel on Monday at 1638 GMT.

Goldman said OPEC should put pressure on American shale oil producers by creating a market structure known as backwardation, when the future trading price of a commodity is below the current spot market value.

By extending cuts into 2018 and promising to boost output next year, OPEC could force the oil market into backwardation that would scare away private equity and other investors who have been funding the American shale producers.

“The binding force to sustainably slow shale growth lies on the funding side,” Damien Courvalin, a Goldman analyst, wrote in the research note to clients. (Additional reporting by OPEC team in Vienna; Writing by Isabel Coles, Dmitry Zhdannikov and Dale Hudson; Editing by David Goodman and Edmund Blair)