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Why we Intervened in Forex Market –CBN

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CBN
  • Why we Intervened in Forex Market

The Central Bank of Nigeria on Thursday said that its current intervention in the foreign exchange market was purely to ease the pressure on the naira and had nothing to do with succumbing to blackmail from some quarters.

The Acting Director, Corporate Communications Department, CBN, Mr. Isaac Okoroafor, stated this while reacting to some trending posts in the social media to the effect that the current appreciation of the naira was as a result of the alarm raised about the illegal sale of forex at ridiculous rates to some people.

A Lagos-based businessman and former governorship candidate, Babatunde Gbadamosi, had claimed that the CBN was engaged in racketeering in the allocation of forex, which he alleged, had led to disparity in the allocation of foreign exchange to cronies of the present administration.

Gbadamosi, who had accused the CBN of selling dollars to some people for as low as N3, was later arrested by the Department of State Services and has been in detention for over five days.

But reacting to the development, Okoroafor said that the CBN did not sell dollars directly to individuals and that the figures being cited by Gbadamosi were as a result of formatting errors during the filing of forex returns by Deposit Money Banks to the CBN.

He said the banks involved had been queried and responses obtained from them, adding that the appreciation of the naira was in no way connected to the allegations of Gbadamosi.

Okoroafor stated, “I want to state categorically that there is no relationship whatsoever between the allegations by the so called person that dollar was being sold at 61 kobo and the current appreciation of the naira.

“What led to the appreciation of the naira is that the CBN has done its intelligence work on the market and we came to the realisation that much of what was driving the demand at the Bureau De Change and parallel market was speculation.

“We reasoned that since there is a lot of pressure on the two segments from people seeking to buy foreign currencies for Business Travel Allowance, tuition and medicals that if we successfully address that, the pressure will come down.

“Also, before now, the level of our reserves was not enough to make us comfortable enough to really do the kind of intervention that is required. We decided to do so now because we are a bit more comfortable with our level of reserves.”

The apex bank spokesperson noted that since the new forex policy, the CBN had intervened with over $500m in the market, which had led to naira gaining strength.

He added, “Let me also state as prove that when we placed $500m in the market, only $370m was taken. That tells you that the real demand is $370m. When we placed $230m in the market, only $221m was taken.

“Anybody who has gone foul of the law, and the security agencies have caught up with him, should go and face his or her case and stop causing confusion among participants in the market.”

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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Economy

NLNG Boosts Cooking Gas Production to 1.5 Million Metric Tonnes Annually

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cooking gas cylinder

Nigeria Liquefied Natural Gas Limited (NLNG) has announced a significant milestone in its operations, boosting its annual production of liquefied petroleum gas (LPG), commonly known as cooking gas, to over 1.5 million metric tonnes.

This surge in production underscores NLNG’s commitment to meeting the rising demand for clean cooking energy in Nigeria.

The entirety of NLNG’s 1.5 million tonnes production is now being sold domestically within Nigeria.

Moreover, the company has initiated a landmark shift by starting to supply LPG in naira, moving away from the traditional practice of trading in United States dollars.

This move aligns with calls from stakeholders in the oil and power sectors advocating for naira transactions, especially amidst the challenges posed by currency fluctuations.

During a panel session at the 7th Nigeria International Energy Summit in Abuja, NLNG’s General Manager of Finance, Fatima Adanan, highlighted the company’s dedication to enhancing LPG penetration across the country.

Adanan emphasized NLNG’s vision to make Nigeria a better place by promoting the use of cleaner energy sources like gas.

While NLNG’s production surge is commendable, Adanan acknowledged that Nigeria’s LPG requirements surpass the current output, necessitating imports to bridge the gap.

However, NLNG remains committed to expanding its production capacity to meet the nation’s energy needs and drive increased adoption of LPG as a cleaner cooking fuel.

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Economy

CBN Raises Benchmark Interest Rate by 400 Basis Points to 22.75%

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has raised the benchmark interest rate by 400 basis points to a record 22.75%.

The decision made by the Monetary Policy Committee (MPC) comes amidst rising inflationary pressures and growing uncertainty in Africa’s largest economy.

Nigeria’s inflation rate rose to 29.90% in January 2024, the highest in over two decades while the nation’s unemployment rate quickened to 5% in the third quarter of 2023. Suggesting that the rising costs have continued to drag on both new job creation and the existing ones.

This coupled with a series of policy adjustments implemented by President Bola Ahmed Tinubu has plunged economic productivity and eroded consumer spending as citizens grapple with high fuel prices, electricity tariffs, a record-high foreign exchange rate, and insecurities.

Therefore, it is surprising that the Monetary Policy Committee (MPC) led by the CBN will further increase borrowing costs by 400 basis points at a time when job creation is paramount.

While the economy reportedly grew by 3.46% in the fourth quarter (Q4) of 2023 on the back of robust performance of the services sector, this growth is yet to crystalise as businesses and citizens have taken to the street protest against the harsh economic situation.

Economic experts have started questioning the data from the National Bureau of Statistics (NBS) given its lack of correlation between the data and economic reality.

 

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Economy

President Tinubu Unveils Geometric Power Plant in Aba After 20-Year Wait

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Geometric Power Plant

After two decades of anticipation, President Bola Tinubu, through his representative Vice President Kashim Shettima, inaugurated the long-awaited Geometric Power Plant in Aba, a significant milestone in the city’s quest for reliable electricity supply.

The event, which also saw the commissioning of three rehabilitated roads by Abia State Governor Alex Otti, symbolizes the culmination of years of perseverance and determination to transform Aba’s power landscape.

Addressing the audience, Vice President Shettima hailed the project as a testament to the power of visionary leadership and unwavering commitment to progress.

He said the Geometric Power Plant exemplifies the transformative impact of strategic infrastructure investments on local communities.

Governor Otti echoed similar sentiments, emphasizing the importance of the power project in positioning Aba as a hub for national and international business ventures.

He commended the efforts of Geometric Power Limited while urging them to uphold transparency and avoid exploiting consumers.

The inauguration of the Geometric Power Plant comes amidst growing concerns over Nigeria’s power infrastructure and the need for sustainable solutions to address electricity shortages.

The project, with a capacity of 188MW, holds promise for significant improvements in power supply across Abia State, benefitting nine out of seventeen local government areas.

The Managing Director of Geometric Power Limited, Ben Caven, underscored the scale of investment involved, totaling $800 million.

He highlighted the comprehensive nature of the project, which includes the installation of new power substations and a 27km natural gas pipeline, signaling a comprehensive approach to enhancing Aba’s energy infrastructure.

In conclusion, the inauguration of the Geometric Power Plant represents a transformative moment for Aba, offering renewed hope for economic growth and prosperity powered by reliable electricity supply.

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