- Naira Exchanges at N445 to a Dollar Amid Forex Scarcity
Low dollar liquidity has started impacting the value of the Nigerian Naira, according to Bureau de Change Operators.
The Central Bank of Nigeria had announced the resumption of forex sales to small and medium businesses and parents looking to pay their children tuition fees abroad.
However, the apex bank suspended sales of dollars to the Bureau De Change operators in the country until airlines resume operations.
This, the Association of Bureau De Change Operators of Nigeria said is responsible for a jump in forex rate this week.
Alhaji Aminu Gwadabe, the President, Association of Bureau De Change Operators of Nigeria, said, “The extension of airport lockdown as well as the sale of forex to the BDCs pending when air travels resume has impacted the naira negatively from N425/$ to $445/$ in the parallel market.
“However, the assurances of the CBN governor to foreign investors on ease of exit have helped to flatten the curve at N445/$ without any sign of further depreciation at the close of business today.
“The persistent dollar scarcity with shrinking liquidity in the market is one of the major unintended consequences of the shutdown of the BDCs window.”
This may not be unconnected to the falling foreign reserves and weak revenue generation due to the low oil prices.
It should be recalled that the apex bank had announced on Sunday that it would devote available foreign exchange to strategic importation or service obligations.
A strategy to further manage limited foreign reserves as the nation grapples with the negative impact of COVID-19 and low fiscal buffer.
But with the Naira trading at N445 to a US dollar on the parallel market, the exchange rate of the local currency may slide to N600 per US dollar at the non-deliverable fx futures market.
Accordingly, the prices of goods and inflation will surge given that Nigeria is largely an import-dependent economy.
Low dollar liquidity amid high demand by foreign investors looking to move their funds oversea will impede the central bank from effectively supporting the Naira at the foreign exchange market.
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.
E-commerce Black Friday Sales Estimated to Surge by 40% to 10.2 Billion
Alibaba Merchants Sell $40B in First Half Hour of Singles Day 2020, More than 2019 Event Full Sales
COVID-19 Vaccine: Crude Oil Extends Gain to $48 Per Barrel on Wednesday
Business2 months ago
Npower News on Permanency for Batch A, B
Forex2 months ago
Naira Improves Against Global Counterparts on Black Market
Business1 month ago
Buhari Budgets N420 Billion for Npower, Other Social Investment Programmes in 2021 Budget
Forex3 months ago
Zenith Bank Joins Other Banks to Cap International Spend Limit at $100/Month
Cryptocurrency2 months ago
Bitcoin Gains 1.67 Percent to $11,050 Per Coin Amid Liquidity Issue
Business3 months ago
Again, UBA Reduces International Spending Limit on Naira Card as Forex Scarcity Persists
Business3 months ago
FG Approves Stipends for Exited N-Power Beneficiaries
Stock Market3 months ago
Zenith Bank Declares 30 Kobo Interim Dividend for H1 2020