- CBN’s Planned Interventions May Crash Dollar Further
The United States dollar may record further loss this week as indications have emerged that the Central Bank of Nigeria is planning to carry out more interventions in the interbank market.
It was learnt on Sunday that the CBN had concluded an arrangement to pump more foreign exchange into the interbank space to meet the demands of genuine wholesale and retail customers.
This, CBN sources said, was aimed at strengthening the value of the naira against other international currencies, especially the greenback.
The naira has been recording significant gains against the US dollar, United Kingdom pound sterling and euro in recent weeks.
The local unit crashed at the parallel market from 520/dollar recorded over one month ago to 385/dollar on Friday.
Retail currency dealers said on Sunday that the dollar, euro and the pound was going for N375, N405 and N475, respectively, over the weekend.
They said the foreign currencies might go southwards further against the naira if the CBN pumped in more forex into the interbank space.
The Acting Director, Corporate Communications, CBN, Mr. Isaac Okorafor, said the regulator was planning to inject more forex into the market this week.
The CBN, he said, was committed to sustaining the tempo of liquidity in the interbank market for the sake of different categories of genuine end-users.
He, therefore, urged authentic prospective customers to freely approach their respective banks with relevant requirements to apply for the purchase of foreign exchange, assuring that the banks had adequate supplies to meet genuine needs.
Okorafor also warned forex dealers against engaging in acts capable of disrupting the smooth operations of the forex market, stressing that the CBN would penalise any organisation found guilty of bending the rules.
The CBN has so far injected over $1bn into the forex market in the past one month as it steps up efforts to stabilise the naira.
During the last intervention, the CBN offered $100m for sale to authorised dealers but only $82m was bought.
It is yet unclear if the CBN is ready to crash the dollar below the current rate sold to end-users seeking forex for personal travel allowance, medical bills and school fees.
Some analysts believe the regulator may not be ready to make such move at the moment.
CBN Maintains 11.5 Percent Monetary Policy Rate, Leaves Other Ratios Unchanged
The Central Bank of Nigeria led Monetary Policy Committee (MPC) has left the interest rate unchanged at 11.5 percent to further stimulate activities in the real sector of the economy.
Godwin Emefiele, the Governor of Central Bank of Nigeria disclosed this at the end of the MPC meeting on Tuesday in Abuja.
He said other parameters, the Cash Reserve Ratio (CRR), Liquidity ratio, and asymmetric corridor, were left unchanged.
According to the Governor, the committee voted unanimously to maintain the current monetary policy and attributed the surge in inflation to structural policies, the increase in pump price and the recent #EndSARS protest.
Highlights of CBN-MPC’s Decision
- MPR was kept at 11.50%
- The asymmetric corridor of +100/-700 basis points around the MPR
- CRR was retained at 27.5%
- Liquid Ratio was also kept at 30%
Unity Bank Grew Gross Earnings by 8 Percent to N34 Billion in Nine Months
Unity Bank Plc grew gross earnings by 8 percent despite COVID-19 and other headwinds that hurt the profitability of most businesses in the first nine months of the year.
A break down of the bank’s unaudited financial results for the period showed gross earnings rose by 8 percent to N33.91 billion for the nine months ended September 30, 2020, up from N31.26 billion posted in the same period of last year.
The lender’s total assets rose by 44 percent from N293.05 billion in the corresponding period of 2019 to N420.87 billion in the period under review.
Unity Bank grew profit before tax from N1.61 billion in 2019 to N1.71 billion in the period under review, while profit after tax expanded from N1.48 billion in the corresponding period to N1.57 billion in 2020.
Customers’ deposits stood at N332.36 billion during the period under review, up from N257.69 billion posted in 2019.
Commenting on the performance, Mrs. Tomi Somefun, the Managing Director/Chief Executive Officer, Unity Bank Plc, expressed delight at the strong growth recorded across the bank’s balance sheet, especially from both the liability and assets side of the business and across key indices.
She said, “even as the bank continues to innovate in its e-business product bouquet to target and support value chain business with robust technology and thus diversify its earnings base.”
Somefun said, “One of the areas that will define our strategic direction going forward is investment in alternative channels, leveraging further deployment of resources in technology.
“COVID-19 gave us a chance to test the integrity and scalability of our technology, the IT infrastructure, and the electronic banking channels, and provided us an opportunity to see where we needed to improve and strengthen, knowing that the future of sustainable banking business is in alternative channels.”
Financial Sector Grew by 6.8 Percent in the Third Quarter
The finance and insurance sector that comprises of both the financial institutions and insurance subsectors grew by 5.91 percent year-on-year in nominal terms in the third quarter (Q3).
According to the National Bureau of Statistics (NBS) latest report, the financial institutions’ subsector accounted for 88.89 percent of the sector in real terms in the quarter under review while the insurance subsector contributed the remaining 11.11 percent.
During the third quarter of 2020, the financial institutions’ subsector grew by 6.8 percent in Q3 2020 from 28.41 percent in Q2 2020 and 0.61 percent in Q3 2019 despite COVID-19 and a tough operating environment. The insurance subsector, however, contracted by -18.67 percent in Q3 2020 from -29.53 percent in Q2 2020 and 3.96 percent in Q3 2019.
On a quarterly basis, the sector declined by 24.76 percent.
In terms of contribution to GDP, the finance and insurance sector contributed 2.46 percent in Q3 2020, higher than the 2.40 percent it represented a year ago and lower than the contribution of 3.76 percent achieved in the previous quarter.
The economy contracted by 3.62 percent in the third quarter following a 6.10 percent decline posted in the second quarter. Nigeria is officially in the second economic recession in four years.
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