Connect with us

Finance

Foreign Exchange Reserves Rise by $589m in One Month

Published

on

Forex Weekly Outlook October 31-November 4
  • Foreign Exchange Reserves Rise by $589m in One Month

The nation’s foreign exchange reserves, the volume of money or other assets held by the Central Bank of Nigeria (CBN), a lender of last resort, which the government uses to offset its liabilities, have recorded an increase of $589 million, after weeks of consistent and gradual gains, despite demand pressure.

The increase now brings the stock of reserves to $24.49 billion, up from $23.91 billion four weeks ago, representing a 2.5 per cent rise.

It also closed up a two-month decline to $247 million, after losing $836 million between September ($24.74) and October ($23.91).

The international price of crude oil has remained relatively stable in recent weeks, although the country’s production has been below expectation due to the activities of militants.

However, the price stability, slight improvement in capital importation and the country’s management of the foreign exchange policy through the CBN, have also contributed to the assessed reserves’ accretion.

Besides, earlier in the month, African Development Bank (ADB), a regional multilateral development bank, engaged in promoting the economic development and social progress in the Continent, delivered $600 million facility, out of the $1 billion pledge to Nigeria, which may have aided the reserves recovery.

Afrinvest Securities Limited, involved in the buying and selling of financial instruments, noted that despite the market flexibility, there are still some setbacks.

According to analysts in the firm, although the interbank foreign exchange rates have remained stable at N305.7 to $1 for a long time, the parallel market, where all the “ineligible 41 items” are funded together with shortfalls from the official market, have been between N450 and N470 in a long while and a setback.

Recall that The Guardian yesterday exclusively reported that the review of the ineligible 41 items as being clamoured for may take a while longer, as the apex bank is opposed to it in view of its implication on backward integration, now beginning to ride on a tempo.

Meanwhile, forex restrictions have been observed by analysts as weighing heavily on the economy, the third quarter report showed that the naira depreciated by 60 per cent, against the dollar to N315 on the interbank market during the period.

Already, the rising inflation, which measures sustained increase in the general level of prices of goods and services, has been blamed on pass-through cost from high exchange rates in the importation of the items and associated raw materials into the country.

According to Renaissance Capital, in a note to The Guardian, forex restrictions persisted in the third quarter, leading to the interbank market becoming “increasingly fragmented and opaque.”

“We think this explains the continued decline of some key non-oil sectors, including trade, manufacturing and construction. Trade contracted for the first time this decade by -1.4 per cent year-on-year in Q3, against 4.4 per cent a year ago.

“This reflects traders’ inability to import merchandise, resulting in a decline in goods handled. Construction is undermined by low public investment as the Federal Government has only spent 20 per cent of its 2016 target. Manufacturers can only get a fraction of the FX needed to import inputs and capital equipment,” the company said.

The Research and Investment Advisory of SCM Capital Limited, Sewa Wusu, said the economy has been feeling the heat and weakness of activities since the year, adding that the foreign exchange crisis is real and has impacted the overall system.

“Manufacturing, affected by forex illiquidity for importation of raw materials; reduced banks’ earnings; and the oil sector, with price volatility, raised bad debts for banks. Almost all the banks made huge provisions over non-performing loans. So how could they contribute meaningfully?

“The borrowing plans, expectedly, would provide a level of support for the forex issues, but how far and quick the response would be is what we do not know.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Finance

Emefiele Pledges Accommodative Monetary Policy to Boost Economic Growth

Published

on

Godwin Emefile

Emefiele Pledges Accommodative Monetary Policy to Boost Economic Growth

The Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has pledged to adopt accommodative monetary policy stance in 2021 in order to support economic growth in the country.

Emefiele, said this on Friday, while speaking at a CBN/Bankers’ Committee’s initiative for economic growth, which is a one-day special summit on the economy by bank chief executive officers.

The theme of the summit is: “How to Overcome the Pitfalls of Recession.”

Nigeria’s economy recently came out of recession, according to the Gross Domestic Product report for fourth quarter 2020 released by the National Bureau of Statistics.

Owing to the slump GDP growth of 0.11 per cent that lifted the economy out of recession, Emefiele said it was imperative that, “we do all we can in 2021 and beyond to ensure that we build on the positive momentum and strengthen our efforts at stimulating growth.”

He expressed optimism that with the discovery and deployment of vaccines worldwide, 2021 would be a year of massive global recovery and Nigeria must not be left out.

“The banks CEOs are here, whether by moral suasion or by force, they will have to participate in this journey. In order to drive and sustain this recovery therefore, we need to sustain the accommodative fiscal and monetary policy measures aimed at improving access to finance for households and businesses.

“Secondly, we must prevent a resurgence in Covid-19 related cases. Thirdly, we must ensure that a significant number of our population is significantly vaccinated and also improve foreign exchange inflows into our country,” he added.

Continue Reading

Banking Sector

CIT Microfinance Bank Disburses Over N16bn Loans

Published

on

micro-finance-bank

CIT Microfinance Bank Disburses Over N16bn Loans

CIT Microfinance Bank Limited says it has disbursed about N16bn loans since it commenced operations as part of its contributions to the financial sector and empowerment of businesses.

The Managing Director of the microfinance bank, Mr Kingsley Eremionkhale, disclosed this during the company’s 10th anniversary in Lagos recently.

He reiterated that the bank was committed to supporting the growth of small and medium-scale enterprises in the country.

“Since inception, we have disbursed loans worth about N16bn. Our operation is not just about profit-making, but we have impacted many lives, empowered many businesses, and done a lot in terms of our core mandate as a microfinance bank.”

While appreciating its customers who had been loyal to it for years, he said it was concerned about their business success.

The managing director said, “We are part of our customers’ businesses. We provide services beyond lending and savings products and we also give financial advisory services.”

He appreciated the customers who had stayed with the financial institution for many years.

The managing director noted that the MfB is a state-licensed bank operating in Lagos, and a subsidiary of Capitalfield Investment Group.

He also attributed the success of the MfB to the board of directors which it said had been supportive, the management team and its workforce in the past 10 years.

While saying that the bank could lay claims to exponential growth, he said the public should expect more from it.

He also said that it was driving its operations through its digital offerings and our e-channels, to improve its services to our customers.

Continue Reading

Finance

FMDQ Approves Valency Agro’s N5.12bn Commercial Paper

Published

on

FMDQ

FMDQ Approves Valency Agro’s N5.12bn Commercial Paper

FMDQ Securities Exchange Limited has announced the approval of the quotation of the Valency Agro Nigeria Limited N5.12bn Series 1 Commercial Paper under its N20bn CP Programme on its platform.

The Exchange said in fostering the development of the Nigerian debt capital markets, it had continued to avail its credible and efficient platform as well as tailor its listings and quotations services to suit the needs of issuers and registration members through innovative and uninterrupted service delivery.

It said in a statement on Thursday that the Valency Agro Nigeria CP debut issue came at a time when the Nigerian economy was bedeviled with soaring food prices, amidst compounding challenges of insecurity.

It said the agricultural sector and its attendant transformation agenda had never been more important in driving increased and sustainable production of agricultural products as well as the derived foreign earnings through exports.

The Exchange said the proceeds from the issue of the CP would be applied by Valency Agro towards meeting the mid-term working capital requirements of the various agricultural produce under its portfolio such as cashew, sesame, cocoa and in value addition prior to export.

The Executive Director, Valency Agro Nigeria Limited, Mr Sumit Jain, was quoted as saying, “We are thankful to our investors towards showing their faith in our agenda to grow the agriculture-focused business with a clear aim to maximise value addition and create employment opportunities in Nigeria.

“We would also like to commend the efforts made by FBNQuest Merchant Bank Limited’s team to build the reach and FMDQ for their unconditional support for the industry”.

The Head, Capital Markets, FBNQuest Merchant Bank, Mr Oluseun Olatidoye, said, “FBNQuest Merchant Bank Limited is delighted with the successful debut of the N5.12bn Series 1 CP issued by Valency Agro Nigeria Limited. This reiterates our effort to enable underserved sectors access the debt markets, optimise their capital structure and further deepen the domestic capital markets.

“We are proud of the instrumental role FBNQuest Merchant Bank played in this transaction and appreciate the trust the management of Valency Agro placed in us to assist them. Our clients remain our priority, and we strongly believe their success is our success.”

Continue Reading

Trending