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Osinbajo: Nigeria to Make FX More Flexible, Conclude Eurobond End of Q1

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  • Nigeria to Make FX More Flexible, Conclude Eurobond End of Q1

Nigeria hopes to conclude the sale of a $1 billion Eurobond by the end of the first quarter of 2017 and will seek to make its foreign exchange market more flexible, Vice-President Yemi Osinbajo said yesterday.

Nigeria is in its deepest recession in 25 years and needs to raise money to make up for shortfall in its budget. Its revenues from oil have plunged due to low international prices and militant attacks in its crude-producing heartland, the Niger Delta, have cut its output.

The government began the process of appointing banks for the sale of the Eurobond in September and had said it wanted to issue the bond by the end of the year. It has yet to announce a lender to lead the sale, however.

“At the very latest, between the end of the year and the first quarter of next year we will begin to see all that process concluded,” Osinbajo told Reuters in an interview.

The vice-president said the severe loss of petro-dollars had caused “serious” foreign exchange shortages and had been worsened by attacks on its oil pipelines and export terminals.

The government had wanted to issue the Eurobond to help plug a gap in its record N6.06 trillion ($19.9 billion) budget this year, in addition to tapping concessionary loans from the World Bank and China as its oil revenues fell.

So far only the African Development Bank (AfDB) has come to its aid, approving a $600 million loan, the first tranche of a total $1 billion package.

Osinbajo also said his office was working with the Central Bank of Nigeria (CBN) to make the foreign exchange market more flexible and more reflective of actual demand and supply.

The regulator had in June officially ended its policy of pegging, or fixing, the naira’s exchange rate at N197 per dollar to let the currency float freely.

But despite the devaluation of the naira, the central bank has continued to manipulate the exchange rate, which has discouraged investors and created a crippling shortage of dollars for businesses that need to import, while on the black market the naira is changing hands at N475 per dollar.

To keep down the street price of dollars, the central bank sanctioned the arrest of FX dealers in Lagos, Abuja and Kano, but the crackdown turned out to be futile.

Nigeria’s crude production, which was 2.1 million bpd at the start of 2016, fell by around a third in the summer following a series of attacks by Delta militants who want a greater share of the country’s energy wealth to go to the impoverished southern oil-producing region.

“At one point we were losing almost 1 million barrels per day (bpd) which translated to 60 percent of oil revenues … and that affects the availability of dollars,” Osinbajo said.

The militants, after saying in August they would halt hostilities to pursue talks with the government, said this month they had resumed attacks because of the continued presence of the army in the region.

Osinbajo said that the government was prepared to talk with the militants but that maintaining security was essential for law enforcement.

Ratings agency Moody’s forecast that Nigeria’s economy could expand by 2.5 percent next year if it could produce 2.2 million barrels of oil per day – the level at which the government made its budget calculations.

To help cover its budget shortfalls, the government is keen to ensure it is collecting taxes efficiently, Osinbajo said.

“We will continue to consider the issue of raising taxes and raising VAT. But at the moment we are more concerned with ensuring that we really improve our coverage,” he said, referring to tax collection.

On the missing Chibok schoolgirls, the vice-president said the release of 21 of the girls in October was as a result of government engagement with Boko Haram.

He did not provide any update on the remaining missing girls, but said the government was continuing to engage with Boko Haram.

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

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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