- Monetary Authorities Faced With Very Difficult Choices
Monetary authorities in Nigeria are currently being faced with very difficult choices in the trade-off between tackling inflation, supporting growth and exchange rate stability, the Deputy Governor, Economic Policy, Central Bank of Nigeira, Sarah Alade, has said.
She noted that achieving appropriate macroeconomic policies had continued to be a great challenge to the monetary authorities.
The CBN revealed this at the maiden breakfast meeting of the Association of Corporate Treasurers of Nigeria held in Lagos with the theme, ‘The Economic Outlook for 2017 and its Impact on the Corporate Sector’.
“The monetary authorities are currently faced with very difficult choices in the trade off between tackling inflation, supporting growth and exchange rate stability,” Alade stressed.
According to her, the survival of the financial system rested chiefly on the shoulders of corporate treasurers.
The apex bank also urged corporate treasurers to collectively begin to take measures to fine-tune the effectiveness of the monetary policy transmission mechanism to ensure increased financial intermediation.
“As treasurers, you are in a vintage position to know where the shoe pinches and you can collectively address the nuances in the system. The weather ahead is not so friendly but dogged determination by your good selves will help ride the stormy headwinds,” Alade, who was represented by the Director, Monetary Policy, CBN, Moses Tule, said.
“As treasurers, you all know that stability is a key business objective,” she noted.
The ACTN is a professional association launched on December 12, 2012 to foster the interests of corporate treasurers of the buy-side and non-bank sell-side of the Nigerian financial markets by providing the platform for policy advocacy, discussions on issues of mutual interest, education/enlightenment and standards development of the corporate treasury function.
The breakfast meeting had a panel session on currency, funding and liquidity management.
The Chief Executive Officer, Citi Bank Nigeria, Akin Dawodu, one of the discussants at the panel session said, “2017 is really just another year. Corporate treasurers must be concerned about the liquidity situation of their institutions. That is an important factor they must all be concerned about. For medium to small-sized corporates, they should expect to see liquidity challenges within a tight monetary policy environment. They have to keep a focus on liquidity of their corporate.”
Also speaking, the Managing Director/Chief Executive Offficer, FMDQ OTC Securities Exchange, Bola Onadele, urged corporate treasurers to always articulate their problems and think of solutions from the bankers and investment bankers.
“In 2017, private company bond rules will be published by FMDQ. This will enable the private companies to tap from the debt capital market,” he added.
COVID-19 Plunges Nigeria’s Oil Revenue by 41% in the First Nine Months of 2020
Nigeria’s oil revenue declined by 41.44 percent in the first nine months of 2020 to $2.033 billion, according to the latest data from the Nigerian National Petroleum Corporation, NNPC.
This represents a decline of 41.44 percent from $3.47 billion filed in the same period of 2019 when there was no COVID-19.
In the September 2020 edition of NNPC’s Monthly Financial and Operations Report (MFOR), revenue from oil and gas rose by 16 percent to $120.49 million in the month of September, a 66 percent or $234.81 million drop from $355.3 million posted in the same month of 2019.
The global lockdowns caused by the COVID-19 pandemic plunged Nigeria’s crude oil sales and global demand for the commodity. This was further compounded by Nigeria’s high cost of production compared to Saudi Arabia, Russia and others that were offering discounts to boost sales during one of the most challenging periods in human history.
Experts like Prof. Yinka Omorogbe, President of Nigeria Association of Energy Economics, NAEE, were not surprised with the drop in earnings given the effect of COVID-19 on the world’s economy.
She, however, called for the revamp of the nation’s petroleum sector laws and diversification of the economy away from oil revenue dependence. She said “Covid-19 made 2020 a very hot year and it battered the oil industry internationally and we are not an exception; so we could not have been unaffected”.
She also said the effect of the fall “is definitely a wake-up call; we have to diversify, strengthen our other resources and capabilities”.
Omorogbe, a former NNPC Board Secretary, urged the government and the operators in the sector to look inward and think strategically, stating: “think medium term, think of where they want to be and the government, above all, must think of how best we can utilize our resources, so that we can achieve our objectives once we know and define them.
“It is a clear wake-up call, if not we will just sit here and find that we have become one of the poorest nations in the world”, she noted.
Crude Oil, Other Commodities Closing Price for Monday
Brent crude oil, Nigeria’s crude oil benchmark, gained 47 cents to $55.88 per barrel on Monday, while the US crude oil expanded by 50 cents to $52.77 per barrel.
Gold for February delivery fell $1 to $1,855.20 an ounce. Silver for March delivery fell 7 cents to $25.48 an ounce and March copper was little changed at $3.63 a pound.
The dollar fell to 103.80 Japanese yen from 103.83 yen. The euro fell to $1.2139 from $1.2167.
Wholesale gasoline for February delivery rose 1 cent to $1.56 a gallon. February heating oil rose 2 cents to $1.59 a gallon. February natural gas rose 16 cents to $2.60 per 1,000 cubic feet.
Gold Gained Ahead of Joe Biden Inauguration 2021
Gold price rose from one and a half month low on Tuesday ahead of President-elect Joe Biden’s inauguration on Wednesday.
The precious metal, largely regarded as a haven asset by investors, edged up by 0.2 percent to $1,844.52 per ounce on Tuesday, up from $1,802.61 on Monday.
He said, “The key factor appears to be the (U.S.) currency.”
As expected, a change in administration comes with the change in economic policies, especially taking into consideration the peculiarities of the present situation. In fact, even though Biden, Janet Yellen and the rest of the new cabinet are expected to go all out on additional stimulus with the support of Democrats controlled Houses, economic uncertainties with rising COVID-19 cases and slow vaccine distribution remained a huge concern.
Also, the effectiveness of the vaccines can not be ascertained until wider rollout.
Still, which policy would be halted or sustained by the incoming administration remained a concern that has forced many investors to once again flee other assets for Gold ahead of tomorrow’s inauguration.
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