Finance

Naira Hits 418/dollar as Forex Scarcity Lingers

Published

7 years ago

August 31, 2016

The naira plunged to 418 against the dollar at the parallel market on Tuesday as scarcity of foreign exchange continued to weigh on the official interbank and black market.

The local currency, which closed at 414 against the greenback on Monday, traded at 415 in Lagos, 417 in Abuja and 418 in Kano, foreign exchange dealers said.

Foreign exchange analysts believe the lingering scarcity of forex has been exacerbated by the banning of eight commercial banks from the forex market by the Central Bank of Nigeria.

The CBN last week Tuesday banned nine lenders from forex transactions for failing to remit the Nigerian National Petroleum Corporation’s $2.334bn into the Treasury Single Account.

The United Bank for Africa Plc, one of the nine lenders, was later re-admitted after it remitted its share of the funds to the TSA.

A day after the CBN banned the nine banks from the forex market, the local currency depreciated to 402/dollar, down from 397 it closed against the greenback on Tuesday.

The local currency has continued to depreciate gradually. Forex dealers maintained that the demand pressure on the dollar, mounted by summer travellers and parents paying schools fees of their children studying overseas ahead of resumption in September, was exacerbated by the CBN’s forex ban on the nine lenders.

The naira, which hit a fresh record low since the CBN floated the currency on the official interbank market in June, first touched 400/dollar at the black market this month.

Meanwhile, the CBN sold around $1.5m at the interbank forex market on Tuesday to support the local currency and ensure the closing rate stabilised, Reuters reported, quoting currency traders.

The naira closed at 305.50 to the dollar on the interbank market, same level it had traded since last week, having touched 325.50 a dollar intraday, but gained after the CBN’s intervention.

Traders said the naira had consistently closed around 305.5 to the dollar since August 22, an indication that the CBN was concerned about a particular price range for the local currency.

On Monday, the forex market registered $327m worth of trades, about six times more than its usual volume.

This included a single $270m transaction at 345 naira per dollar, by foreign investors buying local currency bonds.

Average trading is around $50m a day on normal days; it may reach $100m on days the CBN intervenes in the currency market.

According to traders, dollar shortage remains a major concern in the market even with the daily intervention by the central bank and a pocket of flows from offshore investors.

The naira traded at a fresh record low of 418 to the dollar on the black market, against 414 a dollar on Monday, traders said.

Up Next

FG Approves Three-year External Borrowing Plan

Don't Miss

Nigeria’s External Reserves Rise $595m

Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Comments

Banking Sector

FirstBank UK Enhances Fixed-Income Workflow Through Bloomberg Integration

Published

20 hours ago

November 29, 2023

Investors King

FirstBank UK, the UK subsidiary of First Bank Nigeria Limited, has announced its onboarding on Bloomberg’s Trade Order Management System (TOMS) to enhance its fixed-income workflow.

The integration with TOMS is expected to provide FirstBank UK with access to a comprehensive suite of data and analytics, communications, order, and execution management solutions, streamlining its fixed-income bonds business.

As a niche market-maker for its customers in Africa, FirstBank UK plays a vital role in providing market liquidity in cash bonds, particularly in Nigerian, Angolan, Egyptian, and Ghanaian Eurobonds, to manage risk and optimize its inventory.

Olukorede Adenowo, CEO-designate at FirstBank UK, expressed enthusiasm about the integration, stating, “Bloomberg TOMS provides FirstBank UK with a complete end-to-end trading workflow covering African bonds in most of our home markets. The solution enables us to focus on expanding our footprint in the African Fixed Income landscape and deliver a first-in-kind service to our customers in Africa.”

Bloomberg’s TOMS is renowned for enhancing operational efficiency across enterprises. Lisa Bravo, Global Head of Sell-Side OMS at Bloomberg, commented, “We are pleased to help FirstBank UK enhance operational efficiency across its enterprise with our award-winning sell-side order management solution TOMS.”

FirstBank UK had previously digitized its order management workflow by offering clients access to liquidity on its Eurobond Single-Dealer Platform.

The recent integration with Bloomberg TOMS aims to centralize order handling, aggregated custom analytics, and liquidity tools within a single interface, facilitating real-time access to liquidity for customers.

Robert Hagenaars, Head of Markets at FirstBank UK, highlighted the unique feature of real-time access to liquidity in their markets, providing a distinct advantage for their customers.

This move signifies FirstBank UK’s commitment to leveraging advanced technological solutions to fortify its position in the African Fixed Income market and deliver enhanced services to its clientele.

Finance

Retail Investors Could Raise $94 Billion for Climate Change Financing in Nigeria by 2030

Published

21 hours ago

November 29, 2023

Investors King

A recent report from Standard Chartered’s Sustainable Banking Report 2023 reveals that retail investors have the potential to raise $94 billion towards climate change financing in Nigeria by 2030.

The report indicates a significant interest among Nigerian investors in climate investing with 95% expressing interest and 91% aiming to increase capital flows towards climate-related initiatives, making it the highest among all markets surveyed.

The research, based on a survey of 1,800 respondents in 10 growth markets across Asia, Africa, and the Middle East, identifies a global potential of $3.4 trillion for climate investing, emphasizing the role of individual investors in combatting climate change.

In the Nigerian context, the report suggests that approximately $60 billion could be directed towards mitigation themes, with renewables, energy storage, and energy efficiency expected to attract the most capital.

Additionally, around $34 billion could be mobilized for adaptation, including resilient infrastructure, the blue economy, and food systems.

While there is a high interest in climate financing, the report notes that various barriers are impacting investor participation.

It recommends concerted efforts from financial institutions, regulators, companies, and individuals to establish a wider range of climate assets, enabling greater retail participation.

The report also emphasizes the role of digital and fintech solutions in simplifying processes for investors and calls for industry-wide alignment on reporting standards and minimum disclosure requirements to boost investor confidence.

Lanre Olajide, Head of Wealth Management and Deposits Nigeria and West Africa, commented on the report, highlighting the critical challenge of financing the collective response to climate change and the need to bridge the funding gap through retail investor capital.

He stressed the importance of improving access to solutions, harmonizing reporting standards, and measuring impact to align investments with areas of interest for a more sustainable future.

Finance

Rising Fuel Costs Drive Transportation Expenses Up by 75%

Published

2 days ago

November 28, 2023

Investors King

The recent surge in fuel prices has reverberated through the transportation sector, causing a staggering 75% increase in commuting expenses for the average Nigerian.

The National Bureau of Statistics (NBS) revealed the disconcerting statistics in its latest report, shedding light on the pervasive impact of skyrocketing petrol and diesel prices.

President Bola Tinubu’s withdrawal of the federal government’s subsidy on petrol in May, coupled with the ongoing liberalization of the diesel market, has led to an unprecedented spike in fuel prices.

The NBS’s “Transport Fare Watch for October 2023” indicates that the average retail price for Premium Motor Spirit (PMS) or petrol reached N630.63, a substantial 222.92% surge compared to October 2022.

While the Nigerian National Petroleum Company Limited (NNPC) aims to halt fuel importation by the end of 2024 with refinery rehabilitation projects underway, the current scenario presents a daunting challenge for commuters.

Zamfara state recorded the highest average retail price for petrol at N659.38, while Lagos, Oyo, and Delta states witnessed comparatively lower prices at N590.95, N592.19, and N599.38, respectively.

The North-east zone registered the highest average retail price of N644.16, contrasting with the South-west zone’s lowest price of N616.81.

The surge in fuel costs has cascaded into other modes of transportation. Commuters now face a 75% increase in bus fares within cities, intensifying the financial burden on an already strained populace.

Inter-city bus fares rose by 53.04%, exacerbating the economic challenges faced by Nigerians.

As citizens grapple with the aftermath of these price hikes, concerns linger about the broader economic implications and the potential for further adjustments in response to global market dynamics.

The transportation sector’s resilience and adaptability will be tested as commuters seek innovative solutions to navigate this challenging terrain.