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Forex

Foreign Reserves Near Three-month High at $30.8b

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U.S Dollar - Investors King
  • Foreign Reserves Near Three-month High at $30.8b

The foreign exchange reserves have risen to an almost three-month high of $30.74 billion, latest Central Bank of Nigeria (CBN) data showed.

The dollar reserves grew 1.62 per cent from a month earlier. The CBN did not provide a reason for the increase.

The foreign reserves rose by $7 billion in six months to hit $31 billion at the end of April this year. The increase has restored the total to a level last seen in August 2015.

According to FBN Capital Research, the reasons for the recovery are the disbursement of $600 million by the African Development Bank (AfDB) last November and the recent sale of N1.5 million Eurobond.

“There has also been a significant recovery in oil production over the period. With less certainty we can speculate about improved forex management and possible swap transactions,” it said.

The research firm said the positive surprise was due to the upward swing in reserves, since the CBN stepped up its forex sales in early March.

“The steady accumulation makes it less, not more, likely to adopt the forex reforms sought by the market. There is no sign that the CBN plans to slow its sales, which for wholesale transactions alone are close to $3 billion: rather, it launched its latest window (for investors and exporters) only last month,” the report said.

It said the macroeconomic damage from the latest period of oil price weakness, which is approaching three years, could have been manageable if a fiscal buffer against external shocks had been functioning.

“Legislation passed in 2011 created such a buffer, Nigeria’s own ring-fenced sovereign wealth fund, but the opposition of state governors has prevented its effective operation. The accumulation from 2011 through to the start of the oil price slide in August 2014 would have been substantial,” it added

Meanwhile, the CBN yesterday offered $100 million in wholesale auction at the inter-bank forex market and intervened in the Small and Medium Enterprises (SMEs) and invisible segments, with the sum of $50 million and $45 million, respectively.

Confirming the figures, the CBN Acting Director, Corporate Communications, Isaac Okorafor reiterated that the bank’s intervention was in line with its commitment to sustain liquidity in the market to meet genuine requests as well as deepen flexibility in the foreign exchange market.

Monday’s sale follows the major intervention, last Friday, to the tune of $462,336,426.74, comprising $267.3 million for the Retail Secondary Market Intervention Sales (SMIS), $100 million for wholesale interventions, $50 million for the SMEs forex window and $45 million for invisibles.

Okorafor had said last week that the CBN leadership was quite impressed by the positive impact its current foreign exchange management was having on the manufacturing sector, agriculture and economic activities in general across the country.

He said the CBN would not continue working on achieving the objective of convergence between the exchange rates at the Nigeria Autonomous Foreign Exchange (NAFEX) and the Bureau-de-Change segments of the market, even as he assured proper surveillance of the forex market to guarantee transparency in the sale of foreign exchange.

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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Naira

Black Market Dollar (USD) to Naira (NGN) Exchange Rate Today 25th July 2024

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Naira Exchange Rates - Investors King

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of July 25th, 2024 stood at 1 USD to ₦1,595.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,580 and sold it at ₦1,570 on Wednesday, July 24th, 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: ₦1,595
  • Selling Rate: ₦1,585

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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Forex

IMTOs Drive 38.86% Rise in Foreign Exchange Inflows to $1.07bn in First Quarter of 2024

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Naira Exchange Rates - Investors King

Foreign exchange inflows into Nigeria surged by 38.86% to $1.07 billion in the first quarter of 2024, according to the Central Bank of Nigeria’s (CBN) latest quarterly statistical bulletin.

This increase is attributed to the enhanced contributions from International Money Transfer Operators (IMTOs).

In January, IMTOs facilitated inflows amounting to $383.04 million. This figure dipped slightly to $322.83 million in February but rebounded to $363.70 million by March, this upward trend represents a 10.74% growth from the previous quarter of 2023.

The surge in forex inflows comes at a critical time for Nigeria, as the country continues to grapple with economic challenges, including inflation and a fluctuating naira.

The increased foreign exchange reserves are expected to provide much-needed stability to the naira and bolster Nigeria’s economic standing in the global arena.

CBN Governor Dr. Olayemi Cardoso has underscored the importance of remittances from the diaspora, which constitute approximately 6% of Nigeria’s GDP.

The recent approval of licenses for 14 new IMTOs is seen as a strategic move to enhance competition and lower transaction costs, thereby encouraging more remittances to flow through formal channels.

“We recognize the significant role that IMTOs play in our foreign exchange ecosystem,” Dr. Cardoso remarked during a recent press briefing.

“The inflows we’ve seen are a testament to the effectiveness of our strategy to engage with these operators and ensure that more remittances are channeled through official avenues.”

The CBN has also introduced measures to facilitate IMTOs’ access to naira liquidity at the official window, aiming to streamline the settlement of diaspora remittances.

This initiative is part of the broader effort to stabilize the forex market and address the persistent challenges of foreign currency availability.

The bulletin also revealed that the inflow from IMTOs has contributed significantly to Nigeria’s overall forex reserves, which are crucial for economic stability and growth.

Analysts suggest that the increased remittances will support the naira, providing relief amidst the country’s ongoing economic adjustments.

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Forex

CBN Resumes Forex Sales as Naira Hits N1,570/$ at Parallel Market

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The Central Bank of Nigeria (CBN) has resumed the sale of foreign exchange to eligible Bureau De Change (BDC) operators.

The decision was after Naira dipped to N1,570 per dollar in the parallel market,

CBN announced that it would sell dollars to BDCs at a rate of N1,450 per dollar. This decision aims to address distortions in the retail end of the forex market and support the demand for invisible transactions.

Following the CBN’s intervention, the dollar, which recently traded as low as 1,640 per dollar, has shown signs of stabilization.

The apex bank’s action is expected to inject liquidity and restore confidence among market participants.

BDC operators have welcomed the move. Mohammed Magaji, an operator in Abuja, noted that the dollar was selling at 1,630 per dollar.

He emphasized the market’s volatile nature but expressed optimism about the CBN’s intervention.

Aminu Gwadebe, President of the Association of Bureau de Change Operators of Nigeria, attributed the naira’s decline to acute shortages, speculative activities, and increased demand due to recent duty waivers.

He praised the CBN’s action as a necessary step to alleviate market pressures.

The CBN’s efforts include selling $20,000 to each eligible BDC, with a directive to limit profit margins to 1.5% above the purchase rate.

This strategy aims to ensure that end-users receive fair rates and to curb inflationary pressures.

The CBN’s ongoing reforms seek to achieve a market-determined exchange rate for the naira. As the naira continues to navigate turbulent waters, stakeholders remain hopeful that these measures will lead to a more stable and liquid forex market.

Market analysts suggest that sustained interventions and increased access to foreign exchange could help reverse the naira’s downward trend.

The CBN’s actions demonstrate a commitment to tackling the challenges facing the foreign exchange market and supporting Nigeria’s economic stability.

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