- CBN Targets Exchange Rate Stability, Naira Now 380/Dollar
The Central Bank of Nigeria on Sunday said it would continue to introduce measures to stabilise the foreign exchange market.
It also said that various forex initiatives it had introduced in recent weeks were beginning to yield results with stability recorded in the naira exchange rate.
The central bank had opened various windows to meet the demand for forex by Small and Medium-scale Enterprises, dividend remittances abroad as well as investors and exporters.
The spokesperson for the CBN, Mr. Isaac Okorafor, said the bank put in place the measures to ease the difficulties being encountered by the SMEs and other segments of the economy.
He said SME operators no longer needed to patronise or source for forex through unofficial windows.
According to him, the move has helped to reduce pressure on the Bureau De Change segment of the market.
Okorafor urged all participants in the forex market to cooperate with the CBN and abide by the regulatory guidelines aimed at ensuring hitch-free operations in the market.
It is uncertain if the naira stability will be sustained.
Some experts have doubted the CBN’s ability to wage the currency war against speculators.
The regulator has, however, assured market participants that with the external reserves currently at $30bn and crude oil hovering above $50/barrel, it will sustain the regular dollar injections.
Meanwhile, the naira closed flat at 380 against the United States dollar on Sunday, the same amount it touched on Friday, having reached 390/dollar on Thursday.
After touching an all-time-high of 520/dollar in February, the CBN had increased forex supply into the market to enhance the naira.
As a result, the naira appreciated to 375/dollar in March. However, following some speculative activities and other market dynamics, the local currency fell to 410/dollar two weeks ago.
Last week, the naira reversed the loss and rose to 380/dollar after the CBN increased forex supply.
Currency analysts told our correspondent on Sunday that the naira would record a very slight gain this week even as the CBN steps up its interventions in the market.
A currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, said, “I think the naira may not appreciate significantly above 380/dollar. If there is a slight decline in forex supply, it may do around 385/dollar.
“For now, the naira may not gain significantly further than the 380/dollar until when the CBN chooses to shift the exchange rate for the invisibles.”
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.
OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.
Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”
Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.
Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.
Experts have started predicting $75 a barrel by April.
“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”
Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin
Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges
Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.
The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.
The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.
“We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.
Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.
Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.
In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.
The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.
Oil Prices Extend Gains to $64.32 Ahead of OPEC+ Meeting
Oil Prices Rise to $64.32 Amid Expected Output Extension
Oil prices extended gains during the early hours of Thursday trading session amid the possibility that OPEC+ producers might not increase output at a key meeting scheduled for later in the day and the drop in U.S refining.
Brent crude oil, against which Nigeria oil is priced, gained 0.4 percent or 27 cents to $64.32 per barrel as at 7:32 am Nigerian time on Thursday. While the U.S West Texas Intermediate gained 19 cents or 0.3 percent to $61.47 a barrel.
“Prices hinge on Russia’s and Saudi Arabia’s preference to add more crude oil production,” said Stephen Innes, global market strategist at Axi. “Perhaps more interesting is the lack of U.S. shale response to the higher crude oil prices, which is favourable for higher prices.”
The Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, are looking to extend production cuts into April against expected output increase due to the fragile state of the global oil market.
Oil traders and businesses had been expecting the oil cartel to ease production by around 500,000 barrels per day since January 2021 but because of the coronavirus risk and rising global uncertainties, OPEC+ was forced to role-over production cuts until March. Experts now expect that this could be extended to April given the global situation.
“OPEC+ is currently meeting to discuss its current supply agreement. This raised the spectre of a rollover in supply cuts, which also buoyed the market,” ANZ said in a report.
Meanwhile, U.S crude oil inventories rose by more than a record 21 million barrels last week as refining plunged to a record-low amid Texas weather that knocked out power from homes.
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