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CBN’s New Forex Policy Boosting Manufacturing, Says MAN

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Godwin Emefiele CBN - Investors King
  • CBN’s New Forex Policy Boosting Manufacturing

The Central Bank of Nigeria’s creation of a market-driven foreign exchange window has given hope of revival to manufacturers faced with closure or shrinking capacity by easing their raw material imports, an industry group has said.

“The recent pronouncement of the CBN comes as a relief. If the intervention is sustained, there’s no doubt that we will have continued improvement in sourcing raw materials,” the Director-General, Manufacturers Association of Nigeria, Segun Ajayi-Kadir, told Bloomberg in an interview in Lagos.

The apex bank had on April 24 opened a new foreign exchange trading window where currencies sell at market rates. That eased access to foreign currency that’s been restricted since last year as the bank limited the supply of dollars with the country struggling to cope with lower revenue after the price of oil, the country’s main export, fell more than half from mid-2014.

The economy contracted in 2016 for the first time in 25 years as output shrank.

The regulator said late Thursday that its decision announced earlier in the day to increase dollar supply to small importers did not include 41 items, ranging from toothpicks to plastics, previously banned from accessing foreign exchange from the inter-bank market. It leaves a key demand of the manufacturers’ association unmet.

The restrictions “have created a problem for us because some of those items are raw materials that our members require to run their factories. A few companies folded, especially those in plastics and those in glass; some companies also had to downsize because they were not operating at full capacity,” Ajayi-Kadir said.

Meanwhile, the CBN raised more money from the sale of treasury bills than originally planned at an auction this week after it priced its one-year debt to yield more than inflation, in a bid to support the naira.

The CBN raised N230.60bn ($733m) at an auction on Wednesday, N80.60bn more than it originally planned to sell, data showed on Friday.

Treasury bill sales support the currency by draining some of the naira in the market, thereby making the local currency slightly stronger against the dollar, according to a report by Reuters.

The CBN has been intervening since February to prop up the naira after introducing a complex, multi-tiered exchange rate system.

It has sold more than $4bn on the spot and forward currency markets and has been attracting investors in recent months to its one-year debt with high yields.

The central bank offered the one-year debt with a yield of 18.81 per cent, higher than the March inflation rate of 17.26 per cent, to raise N178.60bn. The note was sold at 18.98 per cent previously.

It sold six-month bills at 17.26 and a three-month debt at 13.6 per cent to fetch a total of N52.57bn.

The central bank issues treasury bills twice a month to help the government fund its budget deficit and to help it control inflation.

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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Forex

Zimbabwe Mandates Partial Tax Payments in New Bullion-Backed Currency

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In a strategic move to reinforce its new bullion-backed currency, Zimbabwe will require businesses to pay a portion of their taxes in Zimbabwe Gold (ZiG), Finance Minister Mthuli Ncube announced on Wednesday.

The regulations, aimed at enhancing the stability and acceptance of the ZiG, are part of broader efforts to strengthen the nation’s fiscal and monetary framework.

“The Treasury is stepping up to complement the fiscal and monetary policy framework aimed at further anchoring the currency, exchange rate, and price stability,” Ncube stated in an emailed announcement.

Since 2020, Zimbabwe has allowed taxes to be settled in the currency businesses predominantly use. However, under the new system, specific ratios will dictate the portions of taxes that must be paid in ZiG and other foreign currencies, alongside those that can solely be settled in the new unit.

The ZiG, introduced on April 5, 2024, replaced the Zimbabwean dollar, which had depreciated by 80% against the US dollar in the official market earlier this year.

Backed by 2.5 tons of gold and $100 million in foreign currency reserves held by the central bank, the ZiG is part of Zimbabwe’s broader strategy to avoid the pitfalls that led to the collapse of its previous six currencies.

“The changes will add to a raft of measures aimed at ensuring the ZiG doesn’t suffer the fate of its predecessors,” Ncube stated.

The finance minister highlighted that the new tax policy is designed to foster greater stability in the ZiG’s value and ensure it becomes a cornerstone of Zimbabwe’s economy. The government hopes that by requiring businesses to transact in ZiG, it will boost demand for the currency, thereby strengthening its position in the market.

Additional measures to bolster the ZiG include urging miners to increase gold production and extending the currency crackdown to include more stringent regulations on companies. These efforts are geared toward ensuring a steady influx of gold to back the currency, thus reinforcing its value and credibility.

Economists have noted that the success of the ZiG will depend heavily on these regulatory measures and the government’s ability to maintain a stable economic environment. The ZiG’s introduction has already shown a “positive impact” on the economy, but sustained confidence in the currency will be crucial.

“Zimbabwe’s new tax policy is a bold step towards economic stability,” said John Mangudya, Governor of the Reserve Bank of Zimbabwe. “By ensuring that a portion of taxes are paid in ZiG, we are creating a consistent demand for the currency, which will help maintain its value and prevent the hyperinflation that plagued our previous currencies.”

The move has received a mixed reaction from the business community. While some see it as a necessary step towards stabilizing the economy, others are concerned about the immediate impact on cash flow and the complexities of adapting to the new system.

“We understand the government’s need to stabilize the currency,” said Takura Mugaga, CEO of the Zimbabwe National Chamber of Commerce. “However, we urge the authorities to consider the implementation challenges businesses might face and provide adequate support during the transition period.”

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Naira

Black Market Dollar to Naira Exchange Rate Today 18th June 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of June 18th, 2024 stood at 1 USD to ₦1,480.

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New Naira notes

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of June 18th, 2024 stood at 1 USD to ₦1,480.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,510 and sold it at ₦1,500 on Monday, June 17th, 2024.

This indicates an improvement in the Naira exchange rate value when compared to today’s rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in the black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

  • Buying Rate: ₦1,480
  • Selling Rate: ₦1,470

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

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Naira

Black Market Dollar to Naira Exchange Rate Today 17th June 2024

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on

New Naira notes

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of June 17th, 2024 stood at 1 USD to ₦1,510.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,490 and sold it at ₦1,480 on Thursday, June 13th, 2024.

This indicates a decline in the Naira exchange rate value when compared to today’s rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in the black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

  • Buying Rate: ₦1,510
  • Selling Rate: ₦1,500

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

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