Nigeria Said to Let Market Decide Naira Rate on Exchange Window – Bloomberg

Nigeria’s central bank will let the market determine the naira’s rate in a new foreign-exchange window for portfolio investors as the nation struggles to revive its economy amid a dollar shortage.

Governor Godwin Emefiele told senior bankers that he would tolerate the naira weakening in the window, which starts today, according to a person who attended meetings with the policy maker over the past two weeks. While the currency may depreciate to its black-market level, the central bank probably won’t devalue the naira’s official rate, the person said, declining to be identified because he wasn’t authorized to speak publicly.

Isaac Okorafor, a spokesman for the central bank, didn’t answer calls to his mobile or immediately respond to a text message.

Nigeria has suffered from a dearth of foreign exchange after the price of oil, its main source of revenue, collapsed. While crude prices have since risen, some investors say the central bank’s capital controls and attempts to stop the naira from weakening are exacerbating the crisis. The nation’s economy contracted last year for the first time since 1991.

The naira has traded at around 315 per dollar on the interbank market since August. The currency’s black-market rate plummeted to a record 520 against the greenback in February, but recovered to 385 after the central bank sold more than $2 billion in forward contracts.

FX Window

The foreign-exchange window will be for bond and stock investors as well as exporters, the central bank said in a statement late on April 21. The FMDQ OTC Securities Exchange, the Lagos-based trading platform, will publish the rate for the window, know as Nigerian Autonomous Foreign Exchange Rate Fixing, or NAFEX, around noon each day.

The Abuja-based regulator said it “reserves the right to intervene” in the window.

Nigeria, U.S. trade hits $1.36b in two months – Guardian

• Petroleum products dominate transaction

Nigeria’s trade with the United States (U.S.) rose by 70.44 per cent from $799.93 million in January and to $1.36 billion in February, according to the latest U.S. Census Bureau data.

Data obtained from the Fact Sheet on Nigeria – U.S. Relations, showed that petroleum products dominated the U.S. import from Nigeria during the period in review. For instance, U.S. crude oil import from Nigeria stood at $936.65 million while gasoline import was $83.43 million.

Petroleum gases, other gaseous hydrocarbons totaled $16.94 million. The previous year, there were no imports in this category. Also, nitrogenous fertilisers totaled $16.66 million, but there were no imports in this category the previous year.

According to the data, through February, 22 Customs districts posted trade surpluses with Nigeria while 13 had deficits. This compares with 25 surpluses and nine deficits for the same period a year ago.

The top surplus was with Houston at $132.63 million, while the largest deficit was with Philadelphia at $759.05 million. The top five U.S. exports to Nigeria, by value through February, were in the categories of Wheat; Gasoline, other fuels; Motor vehicles for transporting people; Corn; and Floating or submersible docks, platforms, respectively. They accounted for 54.27 per cent of total exports to Nigeria.

On the other hand, the value of the top five categories of U.S. imports from Nigeria – oil; gasoline, other fuels; Petroleum gases, other gaseous hydrocarbons; nitrogenous fertilisers; and cocoa beans, whole or broken, raw or roasted 1801, accounted for 98.64 percent of all inbound shipments.

Analysis of trade relations between Nigeria and the U.S. by the Department of State, put the U.S. as the largest foreign investor in Nigeria, with foreign direct investment concentrated largely in the petroleum/mining and wholesale trade sectors.

It added that U.S. exports to Nigeria include wheat, vehicles, machinery, kerosene, lubricating oils, jet fuel, civilian aircraft, and plastics. Nigeria is eligible for preferential trade benefits under the African Growth and Opportunity Act (AGOA). U.S. imports from Nigeria include crude oil, cocoa, cashew nuts, and animal feed.

“The United States and Nigeria have a bilateral trade and investment framework agreement. In January 2016, U.S. Secretary of Commerce Penny Pritzker, visited Nigeria on a fact-finding mission with senior U.S. business executives who comprised the Advisory Council on Doing Business in Africa. The Council’s visit underscored the broad U.S. commitment by both government and the private sector to advance economic engagement with Nigeria,” it added.

The total U.S. trade with the world increased to $592.18 billion, up 6.44 percent compared to the same period last year. United States exports climbed 6.68 per cent to $237.05 billion; imports climbed 6.28 percent to $355.13 billion.

The nation’s top five countries so far this year, by value, are China; Canada; Mexico; Japan and Germany. The overall trade deficit was $118.08 billion, up compared to the same period of last year when the deficit was $111.94 billion.

Nigeria needs reform to avoid future forex crisis, says World Bank – Premium Times

The World Bank, Wednesday, said Nigeria needs to reform its finance to avoid any future foreign exchange crisis.

According to the World Bank Chief Economist for Africa, Albert Zeufack, exchange rate adjustments could lead to higher inflation.

Reuters news agency quoted Mr. Zeufack as saying that making fiscal adjustments in the country’s second year of recession would be “extremely challenging ”.

The Central Bank of Nigeria, CBN, in its effort to stabilise the Naira, has been injecting liquidity into the market.

Nigeria, Africa’s biggest economy, has been battling to move out of recession, its first in twenty five years.

The value of its local currency, the Naira, had also ebbed in the money market, stifling business initiatives and investment.

But the World Bank chief, Mr. Zeufack, noted that continued monetary policy tightening would address the pressures.

Earlier, the nation’s bureau of statistics had said that Nigeria’s inflation declined by 0.53 per cent in March.

Similarly, the IMF also predicted that the nation’s economy would rise by 0.8 per cent in 2017, adding that agriculture and big government spending would drive the growth.

On Wednesday, the naira recorded a major gain closing at 390 per United States dollar at the parallel market, up from 405/dollar on Tuesday.

The development came after the Central Bank of Nigeria, CBN, announced the injection of $280 million into the various segments of the forex market.

Nigeria cenbank says will enable foreign investors to repatriate dividends – Reuters

By Camillus Eboh

ABUJA, April 12 (Reuters) – Nigeria’s central bank will soon resume selling large volumes of dollars on the spot market and make the U.S. currency available to foreign investors at an undisclosed rate so that they can repatriate dividends, it said.

Oil-producing Nigeria has been gripped by a shortage of dollars since crude prices plunged, triggering a currency crisis that left foreign companies struggling to purchase hard currency and battered investor confidence.

It lifted a temporary currency peg last year, but in order to protect its precariously low foreign reserves it has introduced a convoluted exchange rate system that sees different buyers paying various rates for dollars.

The policy has masked pressures on the naira and stunted hard currency inflows as investors struggle to price naira assets, according to analysts.

“The (central bank) will soon … begin spot forex auction (and) open a special window for investors to trade freely … dividends and investment remittances,” the bank said in a statement dated on Tuesday.

Africa’s biggest economy has at least five exchange rates: 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, school and medical fees.

The naira closed trading on Wednesday at 306.10 on the spot market, supported by central bank dollar sales, and 410 on the black market.

The bank 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.

Customers needing dollars immediately have had to pile into the black market, resulting in a sharp weakening of the naira’s unofficial value.

On Monday, the central bank said it planned to sell shorter-dated dollar forwards to inject liquidity into the official market and support the naira, selling $100 million on Tuesday on such contracts and offering the same amount on Wednesday.

The bank also said on Monday it would sell up to $20,000 per quarter to small firms. It did not disclose a rate of exchange for the sale.

Analysts estimate the bank has sold close to $4.1 billion in forward sales in roughly a month.

In its Tuesday statement, the bank said now-rising oil prices had increased its foreign reserves to $30 billion from $24 billion a year ago. (Writing by Chijioke Ohuocha; Editing by Alexis Akwagyiram and Richard Lough)


Nigeria needs $139 oil price to balance budget – Fitch – Punch

Femi Asu with agency reports

Nigeria is in the worst position among major oil exporting countries in the Middle East, Africa and parts of Europe to have balanced budgets this year, with oil forecast to average $52.50 per barrel, according to Fitch Ratings Limited.

The country needs an oil price of $139 per barrel to balance its budget, the global rating agency said in a report on 14 major oil exporting nations in the Middle East, Africa and emerging Europe.

The forecast break-even oil prices of other African countries, Angola, Gabon and Republic of Congo were put at $82, $66 and $52 per barrel, respectively.

According to Fitch, Saudi Arabia needs an oil price of $74 per barrel; Bahrain, $84; Russia, $72; Kazakhstan, $71; Oman, $75; Azerbaijan, $66; Iraq, $61; United Arab Emirates, $60; Qatar, $51; and Kuwait at $45.

It said even after cuts in government subsidies and currency devaluations, 11 of them would not have balanced budgets this year, including Saudi Arabia, Bloomberg reported on Thursday.

“Fiscal reforms and exchange rate adjustments are generally supporting improved fiscal positions compared to 2015, but have not prevented erosion of sovereign creditworthiness,” Fitch said.

Only Kuwait, Qatar and the Republic of Congo have estimated break-evens that are below Fitch’s oil price forecast for this year.

Kuwait at $45 per barrel traditionally has a low break-even because of its high per-capita hydrocarbon production and more recently its “large estimated investment income” from its sovereign wealth fund, Fitch said.

Brent crude, a global benchmark, has averaged about $55 per barrel this year. It traded around $54.96 per barrel on Thursday.

The rating agency said it “substantially” raised the fiscal break-even prices for Nigeria, Angola and Gabon from 2015 levels because of rising government spending.

Meanwhile, the Nigeria LNG Limited has begun talks with potential buyers on new contracts for gas supplies from its first three production units at its Liquefied Natural Gas terminal, Reuters quoted a senior official of the company as saying.

Contracts for gas supplies from Trains 1, 2 and 3, which together produce nine million tonnes of LNG a year, are being discussed, said the official who requested anonymity. He was attending the Gastech trade conference in Chiba, outside Tokyo.

Nigeria’s parliament to investigate lack of funds for Delta militant amnesty – Reuters

ABUJA, April 4 (Reuters) – Nigeria’s lower house of parliament on Tuesday launched a probe into a lack of funding for an amnesty programme for militants in the country’s oil-producing heartland, a key factor in maintaining a tenuous peace in the Niger Delta and supporting crude production.

Failure to maintain funding for former militants under the 2009 amnesty could jeopardise the relative stability in the Delta and even result in oil production being choked off, as it was last year by militant attacks that cut crude output by as much as a third.

Nigeria’s House of Representatives will “investigate the circumstances leading to funding constraints affecting the amnesty programme, with a view to avoiding reoccurrence and report back to the House within two weeks for further legislative action,” it said in a motion.

It also said it would urge the finance minister to release the 15 billion naira ($49 million) set aside in the 2016 budget for the amnesty programme.

The finance ministry did not immediately respond to a request for comment.

“The situation is becoming more serious … as tension and threats are already palpable in the Niger Delta Region and amongst the beneficiaries of the programme,” said the lower chamber.

Five months of arrears are owed to former militants, as well as education fees for students in Nigeria and overseas, it said.

Last month, former militant leaders in the Niger Delta urged the government to pay out delayed amnesty stipends or face protests.

The government is now in talks with militants to end the attacks that cut Nigeria’s output by 700,000 barrels a day (bpd) for several months last year, reducing total production at that time to about 1.2 million bpd. It has since rebounded.

Under the amnesty programme, each former militant is entitled to 65,000 naira ($213) a month plus job training. But last month, a special adviser to Nigeria’s president said the programme was facing a cash crunch.

Authorities had previously cut the budget for cash payments to militants to end corruption. They later resumed payments to keep pipeline attacks from crippling vital oil revenues.

Two months of stipends were paid out in January, but the amnesty office said foreign school fees and other allowances had not been sent by the federal government yet.

The damage from attacks on Nigeria’s oil industry has exacerbated a downturn in Africa’s largest economy, which slipped into recession in 2016 for the first time in 25 years, largely due to low oil prices.

Crude oil sales make up around two thirds of government revenue.

($1 = 305.2000 naira) (Reporting by Camillus Eboh; Writing by Paul Carsten; Editing by Mark Potter)


Naira gains after one-week depreciation – NAN

The Naira on Tuesday appreciated against the dollar at the parallel market after a sustained one-week depreciation, the News Agency of Nigeria (NAN) reports.

The Nigerian currency traded between N380 (buying rate), and N390 (selling rate) stronger than N395 recorded on Monday, while the Pound Sterling and the Euro closed at N480 and N415 respectively.

At the Bureau De Change (BDC) window, the naira was sold at N362 to the dollar, while the Pound Sterling and the Euro closed at N483 and N430 respectively.

Trading at the interbank market saw the naira close at N306.25.

Traders at the market said the intervention by the Central Bank of Nigeria (CBN) at the different segments of the foreign exchange market was driving the strengthening of the naira against the dollar.

Aminu Gwadabe, the President, Association of Bureau De Change Operators of Nigeria (ABCON) had predicted the appreciation of the naira as BDCs set to receive more diaspora remittances.

Mr. Gwadabe said the improved inflows of diaspora remittances into the economy in spite of falling oil prices would fast-track rates convergence and unification. (NAN)

Naira to sell at N415/$ as CBN sustains intervention – Gwadabe – NAN

The naira will trade at N415 to a dollar as the series of intervention by the Central Bank of Nigeria (CBN) are sustained, Alhaji Aminu Gwadabe has said.

Gwadabe, President, Association of Bureau De Change Operators of Nigeria (ABCON), told the News Agency of Nigeria (NAN) on Tuesday in Lagos that the new Forex policy had eliminated frivolous demand for dollar.

According to him, frivolous demand for dollar has been responsible for the weakness of the naira.

The ABCON chief said that CBN’s continued intervention at the Forex market would soon spell doom for speculators and currency hoarders.

“Currency speculators and hoarders would suffer more losses as the CBN injects more dollars to the interbank market.

“The sustained intervention by the CBN will technically take speculators out of business.

“My expectation is that if both volumes and applicable exchange rates are reviewed for the BDC sub-sector, the naira would be trading at N415 to a dollar,’’ Gwadabe said.

The ABCON chief said that the CBN had recorded a huge success because of its new policy, adding that the naira had continued to strengthen at the parallel market, exchanging at N435 to a dollar.

He told NAN that granting of more access to the BDCs at the International Money Transfer Services Operators (IMTSO) window would help to further strengthen the naira against the dollar.

NAN reports that the CBN has injected over 1.5 billion dollars since February when it started its intervention at the interbank market.
The apex bank said that its aim was to bring stability to the foreign exchange market and provide easy access of foreign currencies to businesses and individuals.

The CBN had on Monday injected additional 180 million dollars since February when it started its intervention to meet bids for wholesale auction and requests for invisibles such as medicals, school fees and personal travel allowances.

Nigerian central bank head urges cooperation on monetary, fiscal policy – Reuters

ABUJA, March 19 (Reuters) – Nigeria’s monetary and fiscal authorities must cooperate on their policies to help Africa’s largest economy to develop, the central bank governor said, according to his spokesman.

Central Bank Governor Godwin Emefiele made the comments at a two-day retreat for members of the bank’s Monetary Policy Committee and the ministers for finance, budget and investment. The closed-door meeting, which takes place about three times a year, ended on Saturday.

OPEC member Nigeria is in its first recession in 25 years, largely brought on by low oil prices. Crude oil sales account for about two-thirds of government revenue.

The central bank has faced criticism from investors for keeping Nigeria’s currency, the naira, at a rate some 30 percent above the black market, where entrepreneurs are forced to go for foreign exchange with the dollar scarce on official channels.

“Godwin Emefiele reiterated the need for the country’s monetary and fiscal authorities to collaborate and harmonize standpoints so as to develop the economy rapidly,” central bank spokesman Olalekan Ajayi said in an emailed statement on Sunday.

The finance ministry has previously said adjustments were needed to narrow the spread between exchanges rates on the official and black market. The central bank devalued the rate for retail customers in February after Nigeria’s top economic advisor body called for an urgent review.

The bank’s Monetary Policy Committee is due to meet on Monday and Tuesday to set interest rates. Twelve out of 13 economists polled by Reuters predicted that the bank would leave its benchmark interest rate unchanged at 14 percent on Tuesday .

(Reporting by Camillus Eboh and Alexis Akwagyiram, in Lagos, editing by Larry King)


Outside OPEC cuts, Libya and Nigeria still on slow oil recovery path – Reuters

* Libya output threatened by fighting over export sites 

* Nigeria’s militants calm, outlook still unpredictable 

* U.S. shale production, U.S. stock build a bigger threat

By Libby George and Ahmad Ghaddar

LONDON, March 14 (Reuters) – When OPEC reached a deal last year to cut oil output, the decision to exclude Nigeria and Libya from the restrictions was seen as a risk to the group’s efforts to curb a global crude glut.

An oil price rally has already stumbled since the deal, but Nigeria and Libya are not to blame. Output from both nations has slipped since December and violence in the two African states makes their ambitions to hike production look optimistic.

“The success of these cuts, debatable as they may be, will not hinge on Nigeria and Libya,” said ING analyst Hamza Khan.

OPEC members and non-OPEC producers agreed to cut output by 1.8 million bpd for six months from Jan. 1. OPEC has broadly cut the amount pledged, while others have not delivered in full.

After rallying above $58 a barrel in January, Brent has now slipped to around $51, under pressure from bulging U.S. inventories and rising U.S. shale production.

Since the OPEC deal, Libyan production has dipped to 615,000 barrels per day (bpd) from 630,000 bpd in December, as militias battle to control export sites in the east of the country. Libya was producing 1.6 million bpd in 2011. PRODN-LY

In Nigeria, militant attacks in the oil-producing Niger Delta have hobbled output, forcing the closure of the Trans Forcados Pipeline for all but a few weeks since February. Maintenance on the Shell-operated Bonga field has also weighed.

Nigerian output in March is now expected to be about 1.43 million bpd, down from 1.54 million bpd in December, after February’s brief rise to 1.65 million bpd. Nigeria is chasing a target of 2.2 million bpd, last achieved in 2012, according to Reuters calculations. PRODN-NG

Morgan Stanley forecasts Libyan production could rise to 900,000 bpd in the second half of 2017, while Nigeria could produce 1.6 million bpd in the same time frame. But the U.S. bank says unrest could undermine both those targets.

“It is possible that unplanned disruptions increase further,” Morgan Stanley said in a March 10 research note.


Libya’s prospects look particularly unpredictable. Since Libyan leader Muammar Gaddafi was toppled in 2011, the North African nation has fractured as militias battle for power.

“With three rival governments, extremely weak state institutions, and an abundance of armed actors, Libya is anything but a stable and reliable producer,” Royal Bank of Canada analysts wrote in a note.

In Nigeria, industry sources have told Reuters that repairs are nearing completion on the Trans Forcados Pipeline, which could swiftly add 250,000 bpd to output.

But attacks have repeatedly put the pipeline out of action and could do so again if peace talks with militants seeking a bigger share of oil revenues fail.

Even if Nigeria and Libya deliver on production goals -adding a combined 550,000 bpd, based on the most optimistic forecasts – it will still pale compared to the challenge OPEC faces from U.S. shale oil producers, who are adding capacity.

Buoyed by the price revival since OPEC agreed cuts, U.S. shale firms are expected to add 79,000 bpd of extra production in March alone, reaching total output of 4.87 million bpd.

Meanwhile, rising U.S. inventories are overshadowing OPEC’s efforts, with the U.S. Energy Information Administration reporting a rise in the week to March 3 of 8.2 million barrels to a record 528.4 million barrels.

“Storage numbers out of the United States, that’s what would be keeping the bulls up at night,” said ING analyst Khan.