The acute scarcity of foreign exchange, especially the dollar, continued on Wednesday with the naira closing at 372 against the United States currency at the parallel forex market.
According to Punch, forex dealers linked the persistent fall of the naira to panic buying of the dollar and other major international currencies by importers, individuals and businessmen.
With the naira exchanging at 372 to the dollar, the local currency has lost 20 per cent of its value at the parallel market in the last 10 days.
The Central Bank of Nigeria has, however, left its official rate unchanged at N197 to the dollar at the interbank window.
On Friday, the local currency fell to 338 against the US currency, a day after the Bankers’ Committee expressed concern over the mounting foreign exchange bills for school fees and medical bill payment.
The naira, which has been on a free fall in the past few weeks, fell steadily at the parallel market from 310 last Monday to 335 last Thursday.
Equities stocks fell almost by two per cent on Wednesday, hit by a major decline in cement companies’ shares, including Dangote Cement, which accounts for the third of local bourse capitalisation, Reuters reported.
The local bourse index dropped by 1.81 per cent to 24,070 points as investors took profits from previous gains on the stocks.
“Due to the rapid decline of the naira’s value, some offshore investors are booking profit and selling down their holdings,” one stockbroker said.
Shares in Dangote Cement fell by 4.11 per cent; Ashaka Cement was down by four per cent, while Cement Company of Northern Nigeria dropped by 8.89 per cent to drag the index down.
The currency and stock markets have been hit hard by the persistent fall in crude oil prices, Nigeria’s main export, causing a decline in government revenues and the exit of foreign investors from the local bourse.
A forex dealer at the international wing of the Murtala Muhammed Airport, Lagos, Mr. Saliu Mohammed, said the increasing demand for the greenback was overwhelming the market.
This, he said, was responsible for the naira’s free fall.
“Most individuals who sell (dollars) to us are no longer willing; but demand is piling up,” another dealer in Ikeja, who identified himself as Ibrahim Tukur, said.
Last month, the CBN banned dollar sales to the BDC operators, sending the naira to a record low at the black market, and later stopped the daily sale to the interbank market, in an effort to conserve the external reserves, now at their lowest in more than 11 years.
The nation realises around 90 per cent of its foreign exchange earnings from crude oil exports. The foreign reserves have fallen to $27.83bn as of February 12, data from the CBN website showed.
Commenting on the development, the Managing Director, Cowry Assets Management Limited, Mr. Johnson Chukwu, said, “The CBN does not have the forex to manage the exchange rate today. Unless we adjust the exchange rate, things may continue to get worse. As it is today, the naira can no longer be a store of value, going by the rate at which it is losing its value at the parallel market.
“Most people are buying dollar to store their wealth. We cannot ignore the parallel market because that is where most people are holding their transactions. A timely intervention by the Ministry of Finance and the CBN to give a clear guidance on how they intend to manage the exchange rate will save the day.”
Stanbic IBTC Obtains Approvals, License to Establish Life Insurance Subsidiary
Stanbic IBTC Holdings Plc on Friday announced that it has obtained all required Regulatory Approvals and a license from the National Insurance Commission to establish a wholly-owned Life Insurance subsidiary, Stanbic IBTC Insurance Limited (SIIL).
In a statement signed by Chidi Okezi, Company Secretary, Stanbic IBTC and released on Friday, the bank said “The establishment of this new subsidiary essentially complements the bouquet of product offerings by Stanbic IBTC as it continues its goal of being the leading end-to-end financial solutions provider in Nigeria. In this regard, SIIL will aim to facilitate long term insurance for already financially included individuals and will seek to become the preferred Insurer in the Life Insurance Business.
“Stanbic IBTC Holdings PLC, a member of Standard Bank Group, is a full-service financial services group with a clear focus on three main business pillars – Corporate and Investment Banking, Personal and Business Banking and Wealth Management. The group’s largest shareholder is the Industrial and Commercial Bank of China (ICBC), the world’s largest bank, with a 20.1% shareholding. In addition, Standard Bank Group and ICBC share a strategic partnership that facilitates trade deals between Africa, China and select emerging markets. Standard Bank Group is the largest African financial institution by assets. It is rooted in Africa with strategic representation in 21 countries on the African continent.
“Standard Bank has been in operation for over 158 years and is focused on building first-class, on-the-ground financial services institutions in chosen countries in Africa; and connecting selected emerging markets to Africa by applying sector expertise, particularly in natural resources, power and infrastructure.”
World Bank to Discuss New $1.5 Billion Loan Request From Nigeria
The Finance Minister, Budget and National Planning, Mrs. Zainab Ahmed, on Friday said the Federal Government has met all the conditions for a fresh loan of $1.5 billion from the World Bank.
The minister disclosed this on Bloomberg TV.
She said the multilateral financial institution is in the final stage of approving the loan. The minister explained that the loan will be discussed in the bank’s next meeting and possibly be approved in the same meeting.
In June, the Senate approved the borrowing plans but the World Bank pushed back demanding Nigeria fulfill the conditions attached to the $3.4 billion loan received from the International Monetary Fund (IMF) in May.
Some of the conditions were to increase revenue generation by upping VAT, the introduction of tariff reflective electricity bill, the removal of subsidy and the unification of the nation’s foreign exchange.
Most of which the Federal Government has done despite protests from most Nigerians who called the new policies anti-people given their current situation.
Nigeria Realises Over N400 Billion from Company Income Tax in the Third Quarter of 2020
The Federal Government realised N416.01 billion from Company Income Tax (CIT) in the third quarter of the year, according to the latest report from the National Bureau of Statistics (NBS).
This was 3.48 percent higher than the N402.03 billion generated in the second quarter of the year and represents a decline of 20.13 percent year-on-year from N520.89 billion realised in the third quarter of 2019.
A breakdown of the report showed the professional services sector including the telecoms generated the highest amount of CIT at N55.52 billion during the quarter, while the manufacturing sector followed with N42.03 billion.
The banking and financial institutions realised N24.05 billion while the mining generated the least and closely followed by Textile and Garment Industry and Local Government Councils with N120.93 million, N167.51 million and N321.72 million generated, respectively.
The report added that out of the total amount realised during the quarter under review, a sum of N244.70 billion was generated as CIT locally. The federal government collected N70.34 billion as foreign CIT payment and the remain N100.97 billion was received as CIT from other payments.
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