Connect with us

Forex

CBN Injects $1.47B Into Forex Market In One Month

Published

on

banks

The Central Bank of Nigeria injected $1.47bn into the foreign exchange segment of the market as part of its efforts to stabilise the naira in January.

According to figures from the CBN’s January report on its foreign exchange market developments, this was a decrease of 47.4 percent and 64.0 percent from the level in the preceding month and the corresponding period of 2020.

Part of the report read, “Total foreign exchange sales to authorised dealers by the bank was $1.47bn in January 2021, a decrease of 47.4 percent and 64.0 percent from the level in the preceding month and a corresponding period of 2020, respectively.

“A disaggregation showed that foreign exchange sales at the I&E, SMIS, SME, and interbank fell by 79.9 percent, 38.3 percent, 19.8 percent, and 37.3 percent to $0.22bn, $0.48bn, $0.10bn, and $0.04bn respectively.

“Similarly, foreign exchange cash sales to BDC operators and matured swap transactions fell by 19.3 per cent and 48.7 per cent, compared with its level in the preceding month to $0.42bn and $0.12bn respectively in the review period.”

The report said in order to promote transparency and increase diaspora remittance inflows, the bank further updated and reiterated the modalities for the pay-out of diaspora remittances.

In a circular dated January 22, 2021, the bank said it emphasised that only licensed IMTOs were permitted to carry on the business of facilitating remittance transfers into Nigeria.

It added that all diaspora remittances must be received by beneficiaries in foreign currency cash or into their designated domiciliary accounts, and IMTOs were mandated to desist from allowing remittance pay-outs in naira.

The measures were meant to promote transparency in diaspora remittance transfers and thereby improve remittance inflows.

According to reports by members of the Monetary Policy Committee at the last meeting, the CBN continued to defend the naira in January and February.

It noted that the naira exchange rate depreciated across the various windows including the I&E and BDC.

External reserves also declined from $36.6bn in December 2020 to $34.46bn in February 2021.

The committee stated that it was early to know the extent to which the new policy of CBN to boost remittances would impact pressures in the foreign exchange market.

While capital imports had picked up in recent months, the MPC stated that it was still far below the level it was in January 2020.

Forex

Nigeria’s Diaspora Remittances Decline by 28 Percent to $16.8 Billion in 2020

Published

on

US dollar - Investors King

Nigeria’s diaspora remittances declined by 27.7 percent or $4.65 billion from $21.45 billion in 2019 to $16.8 billion in 2020, according to the World Bank Migration and Development report.

A critical look into the report shows remittances to sub-Saharan Africa declined by 12.5 percent in 2020 to $42 billion. This was largely due to the 27.7 percent recorded by Africa’s largest economy, Nigeria, which accounted for over 40 percent of the total remittance inflows into the region.

The report noted that once Nigeria’s remittance inflows into the region are excluded, remittances grew by 2.3 percent in 2020 with Zambia recording 37 per cent.

Followed by 16 percent from Mozambique, 9 percent from Kenya and 5 percent from Ghana.

The decline was a result of the global lockdown that dragged on the livelihood of most diaspora and unclear economic policies.

In an effort to change the tide, the Central Bank of Nigeria (CBN) introduced a Naira 4 Dollar Scheme to reverse the downward trend and boost diaspora inflows into the economy.

However, the reports revealed that other external factors like insecurities, global slow down, weak macroeconomic fundamentals, etc continue to discourage capital inflows.

On Tuesday, the CBN, in a new directive, announced it has halved dollar cash deposit from $10,000 to $5000 per month.

The move is geared towards discouraging overreliance on the United States Dollar and encourage local patronage and production.

Mr. Guy Czartoryski, Head of Research at Coronation Asset Management, had said in the report, “We looked at the top 10 banks and the breakdown of their deposits showed that 40 per cent of their deposits are in dollars and it is quite astonishing.”

Continue Reading

Forex

Deposit Money Banks Reduce Dollar-Cash Deposits by 50 Percent to $5000/Month

Published

on

United States Dollar - Investors King Ltd

Nigeria’s Deposit Money Banks (DMBs) have reduced the amount of United States Dollars that customers can deposit into their domiciliary accounts by 50 percent from $10,000 to $5,000 per month.

A bank official who preferred not to be mentioned confirmed the new policy to Investors King.

He, however, stated that the new policy does not apply to customers making electronic transfers as well as oil and gas companies and dollar payments into government accounts.

Checks revealed that the Central Bank of Nigeria (CBN) introduced the new policy to discourage the strong appetite for the United States Dollar, which has continued to rise.

A recent report has shown that despite persistent dollar scarcity, around 40 percent of bank deposits in the nation’s top ten banks were in dollars.

Mr. Guy Czartoryski, Head of Research at Coronation Asset Management, had said in the report, “We looked at the top 10 banks and the breakdown of their deposits showed that 40 per cent of their deposits are in dollars and it is quite astonishing.”

According to an analyst at ARM Securities Limited, Mr. Olamofe Olayemi, “this has to do with how much confidence the people have in the naira. Over time, we have seen significant depreciation in the naira.

“If you look at what happened in 2020, no one expected that the naira would be devalued twice in that year and even the outlook, this year is suggesting further depreciation in the naira.

“So, it makes sense to a lot of people to store their money in dollars. But, from the CBN standpoint, you agree with me that there is dollar scarcity.”

He, therefore, argued that the new policy might discourage financial inclusion and encourage cash outside the banking system.

Again, it is important for the flow of money to be captured in the system,” he said.

The CBN had extended its Naira 4 Dollar Scheme last week to further encourage dollar inflow into the Nigerian economy.

Continue Reading

Naira

Naira Closed at N411.25 to US Dollar at NAFEX Window

Published

on

Naira Dollar Exchange Rate - Investors King

The Nigerian Naira declined further against the U.S Dollar on Tuesday ahead of the Ramadan holiday to trade at N411.25 to a single U.S Dollar at the Nigerian Autonomous Foreign Exchange (NAFEX) window.

The local currency plunged as low as N420.23 per dollar during the trading hours of Tuesday despite opening the day at N410.33/US$ before settling at N411.25 to a US dollar.

Investors on the window exchanged $98.33 million on Tuesday.

At the parallel section of the foreign exchange, Naira traded at N483 to a United States Dollar; N673 to a British Pound and N580 to a Euro.

Foreign exchange rates remained largely unchanged at the bureau de change section, with the Naira trading at N482 to a U.S Dollar; N674 to a British Pound and N584 to a Euro.

Several factors continue to weigh on the Nigerian Naira, especially with the foreign reserves hovering around record low and crude oil output not at an optimal level.

Other factors like rising inflation rate and drop in economic activity due to COVID-19 effect on the economy and lack of enough fiscal buffer to cushion the economy.

Continue Reading

Trending