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Analysts Hail CBN’s Naira Defence as Rate for PTA, Others is Adjusted to N360/$



Naira - Investors King
  • Analysts Hail CBN’s Naira Defence as Rate for PTA, Others is Adjusted to N360/$

Financial market analysts have welcomed Monday’s decision by the Central Bank of Nigeria (CBN) to lower the naira exchange rate for retail invisibles such as business and personal travel allowances, school fees and medical fees to N360 to the dollar, from N375.

Describing the move as a show of strength by the central bank and its capacity to defend the naira, they however cautioned the bank to be conscious of its maturing obligations and potential risks in the global market, especially volatile crude oil prices.

Desirous of alleviating the pains of retail foreign exchange consumers, the CBN directed all banks to immediately begin the sale of FX for business and personal travel allowances, and tuition and medical fees to customers at not more than N360 to the dollar.

The CBN, in a note, explained that it would sell to commercial banks at N357 to the dollar, adding that banks were expected to post the new rates in the banking halls of their branches immediately.

In line with the new directive, the acting Director, Corporate Communications, CBN, Mr. Isaac Okorafor, said the bank would send examiners to commercial banks to ensure the new rates are implemented.

“Banks are prohibited from selling FX funds meant for invisibles to BDCs,” he added.

The CBN also intervened in the FX market with $185 million.

A breakdown showed that it offered $85 million to banks at the rate of N357/$1 for onward sale to retail end users at not more than N360/$1 for invisibles, while $100 million was sold to authorised dealers in the interbank window to meet the requests of wholesale customers.

Reacting to the directive on the sale of FX for retail invisibles, an analyst at Ecobank Nigeria Limited, Mr. Kunle Ezun, described it as a show of strength by the CBN.

“It also shows that they are winning the battle. I now think that when the CBN talked about creating an exchange rate convergence, it was actually referring to the rate for invisibles.

“So, what the CBN has done is to show its capacity to defend the naira. But we expect the CBN to now push through with liquidity,” he added in a phone interview.

Ezun, however, expressed reservations about how much support the CBN would be able to give the naira, saying: “When the external reserves begin to drop, it would raise a red flag.”

The chief executive of Financial Derivatives Limited, Mr. Bismarck Rewane, who also welcomed the revaluation of the rate for PTA and others, said maturing FX forwards should also be of concern to the CBN.

“We must remember that the FX forward contracts would start maturing as from tomorrow (Tuesday). Forward contracts are posted-dated cheques and when they start maturing is when we would start seeing the effects of the intervention on the reserves.

“I think if for anything, we should be using this opportunity to find a fair value for the naira because oil prices have come down and forward contracts are maturing,” Rewane said.

According to him, by adjusting the rate for such invisibles, “the CBN is just subsidising Nigerians”.

“This could lead to a crisis of false expectations. Rather than move the rate up, what I expected the CBN to do was to open up the market, remove all the restrictions and you will see that the currency will find its real value.

“So, first of all, it is a good move, but it is better to be cautiously optimistic rather than getting carried away,” Rewane stated.

The Chief Executive of Cowry Asset Management Limited, Mr. Johnson Chukwu, who also welcomed the adjustment of the naira for retail invisible, said it was a demonstration of the CBN’s capacity to defend the naira.

“I think before the CBN came out with this, it must have measured its capacity to support the naira. Luckily for the CBN, there is tight naira liquidity in the market and that does not encourage speculative activities.

“People do not have cash to buy dollars to hold anymore and that has supported the naira. The key thing is that as the CBN continues to pump dollar liquidity, it would force more people holding dollar positions to sell and that would definitely help the market.

“For now, a lot of people holding dollars are looking for ways to exit,” Chukwu said.

The naira traded at between N385 and N390 to the dollar at some parallel market points in Lagos on Monday.

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

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Crude Oil

Nigeria Eyes Oil Production Surpassing OPEC Quota Amidst Positive Projections and Global Collaborations



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In a strategic move to exceed the OPEC-imposed oil production quotas, Nigeria, led by the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, is on a trajectory to outperform expectations.

The recent 36th OPEC and non-OPEC ministerial meeting projected Nigeria’s oil production quota at 1.5 million barrels per day (bpd) in 2024.

However, Lokpobiri revealed in a Twitter post that Nigeria currently produces 1.5 million bpd for crude and 300,000 bpd for condensate.

Addressing concerns about Nigeria’s ability to meet these targets, Lokpobiri assured, “What we are producing is much more than what is projected in the 2024 budget estimate.”

Despite discrepancies between OPEC’s projections and Nigeria’s budget estimates, the minister expressed confidence that the country would surpass the outlined targets.

Furthermore, to fortify Nigeria’s position in the global energy landscape, Lokpobiri engaged in a pivotal meeting with Baker Hughes Chairman, Lorenzo Simonelli, on the sidelines of the ongoing 28th United Nations Climate Change Conference (COP28).

Baker Hughes, a global energy technology company, expressed keen interest in sustaining and enhancing its investment in Nigeria’s oil and gas industry. Simonelli emphasized the company’s commitment to contributing to Nigeria’s energy transformation agenda and collaborating on sustainable energy practices.

Lokpobiri commended Baker Hughes for its longstanding partnership with Nigeria and affirmed the government’s commitment to creating an enabling environment for investments in the refinery sector.

The meeting set the stage for a promising collaboration that aligns with Nigeria’s objectives and contributes to global sustainable energy goals.

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Crude Oil

Oil Prices Face Downward Pressure Amid OPEC+ Uncertainty and Middle East Tensions



Crude oil - Investors King

Oil prices find themselves caught in the crossfire of geopolitical tensions and the aftermath of the recent OPEC+ decision on Monday.

Brent crude oil, against which Nigeran oil is priced, shed 0.9% or 73 cents settled at $78.15 per barrel at about 7 am Nigerian time while the U.S. West Texas Intermediate crude oil experienced an 0.8% decline or 64 cents to $73.43 a barrel.

“Crude seems to be under continued pressure from the OPEC+ decision. Some degree of discounting of the deeper OPEC+ cuts is justified, but as of now, the crude complex has completely disregarded them,” stated Vandana Hari, the founder of Vanda Insights, an oil market analysis provider.

Last week, oil prices suffered a slump of over 2%, fueled by investor skepticism regarding the depth of supply cuts committed to by the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+.

Lingering concerns about sluggish global manufacturing activity added to the pessimism.

The OPEC+ cuts, declared as voluntary on Thursday, have raised doubts about the full implementation of the proposed reductions and left investors questioning the metrics for measurement.

As the global focus shifts to the Middle East, geopolitical tensions resurface with renewed hostilities in Gaza.

Against this backdrop, three commercial vessels faced attacks in international waters in the southern Red Sea, leading to heightened concerns over potential supply disruptions.

While the resumption of the Israel-Hamas conflict injected a bullish momentum into oil prices, analysts, including CMC Markets’ Tina Teng, remain cautious.

“However, oil prices may continue to be under pressure for the time being due to China’s disappointing economic recovery and the ramp-up of U.S. production”, Teng stated.

Amid this intricate web of challenges, the specter of additional sanctions on Russia and a potential pause in sanctions relief for OPEC member Venezuela by the White House further add layers of complexity to the already delicate global oil market.

As the world watches, uncertainties persist, shaping the future trajectory of oil prices in an intricate dance of geopolitics and market dynamics.

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Gold Hits Record High and Bitcoin Surpasses $40,000 in Asian Markets Despite Fed’s Cautious Stance



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Gold rose to a record high of $2,135.39 per ounce on Monday during the Asian trading session while Bitcoin broke $40,000 a coin resistance levels. 

This was despite Federal Reserve Chair Jerome Powell’s cautious reminder that policymakers are not in a rush to ease interest rates.

Market analysts observed an influx of investments into gold and Bitcoin, attributing the trend to mounting expectations of Federal Reserve interest-rate cuts in the coming year.

Kyle Rodda, a senior market analyst at in Melbourne, noted, “Markets are piling in on the rate cut bets. Gold can run higher and will do so at the earliest sign of a recession.”

The rally in these alternative assets persisted even as the dollar experienced a slight uptick, and two-year Treasuries retraced some of Friday’s robust gains.

Traders maintained their bets on a potential Federal Reserve rate cut, with swaps pricing in a full reduction by May and projecting a full point of easing by December 2024.

Powell, while stating that the central bank is ready to hike further if necessary, emphasized that policy is “well into restrictive territory.”

This surge in gold and Bitcoin comes on the heels of US stocks closing at their highest since March 2022. However, concerns linger as signs emerge that American households, after a period of exuberant spending, might be starting to pull back.

Shane Oliver, head of investment strategy and chief economist at AMP Ltd. in Sydney, cautioned that the recent rebound in shares leaves them technically overbought and at risk of a consolidation or short-term pullback.

As the global economy continues to face uncertainties, all eyes will be on key events this week, including Australian growth, Chinese inflation, and US non-farm payrolls data.

Meanwhile, the cryptocurrency market anticipates potential approval of US spot Bitcoin exchange-traded funds, adding another layer of excitement to the financial landscape.

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