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CBN Governor Assures Manufacturers Steady Supply of Forex, Advocates End to Environmental Pollution

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Godwin Emefiele CBN - Investors King

The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, yesterday reiterated the bank’s commitment to ensuring steady availability of foreign exchange for manufacturers.

Emefiele also urged banks as well as Nigerians to strive to end environmental pollution and ensure sustenance of banking principles.

Speaking alongside the Minister of Industry, Trade and Investment, Mr. Niyi Adebayo, at an interactive session with a business team from the United Kingdom.

The apex bank governor explained that the fall in oil prices had affected the inflow of forex.

He affirmed that this resulted to the restriction of access to forex for the importation of goods that could be produced locally, in order to ensure judicious use of forex.

He identified the three main sources of forex inflows to the country as the sale of crude oil, remittances from Nigerians abroad and foreign investors.

Emefiele, represented by the Deputy Governor, Economic Policy, Dr. Kingsley Obiora, stated that some of the issues raised by the companies would be looked into to assist them in their daily operations.

However, Adebayo who facilitated the meeting said the growth of the companies would boost the economy and make more money available for the federal government to build more infrastructure and to create jobs for the youths.

A statement by Adebayo’s aide, Mr. Ifedayo Sayo, said the companies lauded the CBN for funding of local companies and the various reforms put in place to assist in keeping their businesses afloat.

They also solicited for more forex to enable them to continue in business, pay their lenders and maintain their machines.

Some of the companies present at the interactive session included GlaxoSmithKline, a pharmaceutical company, Savanna Energy, AzuraPower West Africa, Guinness Plc.

Representative of GlaxoSmithKline, Mr. Omon Elyhibro, lauded the minister and Emefiele for the support which the businesses had received from the government in the firm’s 50 years of operation in the country.

He said it was the desire of the government to make the country the export hub for pharmaceutical products, adding that this will be realised through a partnership with local manufacturers.

He commended the CBN support for the local manufacturing companies.

On his part, Managing Director of Azura Power West Africa, Edu Okeke, also praised the CBN for its support for the power generation company and called for more support in terms of forex allocation.

Okeke who commended the CBN for the various reforms put in place which had helped the growth of the sector stated that the reforms have helped to unlock the sector.

At the event yesterday, the CBN governor, Emefiele, appealed to the banks as well as Nigerians to strive to end environmental pollution.

He said it was imperative to key into the global movement for a greener world adding that; We must keep our ecosystem alive so that everything remains green,” he stated.

Emefiele, at a tree planting session alongside the CBN deputy governors, at the bank’s headquarters in Abuja to commemorate the World Environment Day celebration with the theme: “Ecosystem Restoration,” said lending practices must take the environment into consideration and ensure that sustainable banking principles are observed when banks are lending money.

The CBN governor stated that some international financial institutions and development finance agencies have started to demand evidence of compliance with sustainable banking principles before approving monetary assistance.

He said: “As a bank, you want to borrow money from a bank, they will tell you that as long as they find anything that pollutes the environment, that does not make the environment clean and green, they will not condone that credit activity.

“And we must join not only as bankers, but we must also join as Nigerians and members of the global community to ensure that we join the entire community to ensure that our environment remains green.

“It keeps the oxygen flowing well in our lives and we can all live well and avoid pollutants that destroy our lives and environment.”

Emefiele said the apex bank intended to seize the opportunity to join “all well-meaning human beings all over the world to commemorate a day like this.”

“A day like this reminds us to ensure that our ecosystem remains green. And we need to make sure we remove everything that is creating pollution in our environment.”

At the Model Secondary School, Maitama, the Special Adviser to the CBN Governor on Sustainable Banking, Dr. A’isha Mahmood, urged the pupils, who she described as young ambassadors of the environment, to protect the environment in order to avoid adverse environmental issues.

She stated that the CBN and other financial institutions had in 2012, adopted the Nigerian Sustainable Banking framework, a written document, guiding their business operations and practices, to ensure that their actions are socially and environmentally responsible.

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Forex

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

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US Dollar - Investorsking.com

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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Finance

Nigeria’s FX Inflows Leap 57% as CBN Steers Economic Confidence

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U.S dollar - Investors King

Nigeria’s foreign exchange (FX) inflows have surged by 57% over the past year, signaling newfound stability for the Naira.

Analysts attribute this growth to the Central Bank of Nigeria’s (CBN) consistent policies, which have bolstered investor confidence and enhanced market stability in Africa’s most populous nation.

Data from the CBN reveals that FX inflows rose to $8.86 billion in February 2024, compared to $5.66 billion in February 2023.

This increase is a testament to the effectiveness of the CBN’s strategic measures. Similarly, foreign exchange turnover skyrocketed 180% year-on-year to $240.64 million in February 2024.

“The upsurge in FX inflows reflects the positive impacts of increased interest rates and the relative stability of the exchange rate,” said Ayokunle Olubunmi, head of financial institutions ratings at Agusto Consulting.

He noted that high interest rates in Nigeria are attracting investors seeking better returns compared to developed countries.

The CBN has actively engaged with foreign investors, addressing concerns and providing insights into monetary policy actions.

Olayemi Cardoso, the CBN governor, emphasized that investor confidence has been restored, partly due to the bank’s clearance of a $7 billion foreign exchange backlog.

New investments into Nigeria also increased significantly, reaching $1.24 billion in February 2024, compared to $0.33 billion in January 2024. This uptick is indicative of a more stable and attractive investment climate.

Analysts point out that improved oil production and higher global oil prices have significantly boosted FX earnings.

Also, government policies aimed at attracting foreign investment, along with strategic management of the exchange rate, have played pivotal roles in this economic revival.

The CBN’s efforts to diversify the economy and boost non-oil exports are starting to yield results.

Increased diaspora remittances, facilitated by better official channels and incentives, have further contributed to the rise in FX inflows.

While challenges remain, the positive trend in FX inflows suggests a more robust and stable economy, encouraging further investment.

Consistent and transparent economic policies are expected to enhance investor trust, stabilizing the Naira and fostering a more favorable exchange rate environment.

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Naira

Naira Hits Five-Month Low Amid Dollar Demand Surge

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Naira to Dollar Exchange- Investors King Rate - Investors King

Nigeria’s naira extended its losing streak to a fifth consecutive day as it slipped to its weakest level since March despite the Central Bank of Nigeria’s (CBN) interventions.

The naira closed at 1,577.29 per dollar on Monday, down from Friday’s N1,563.8 per dollar on FMDQ.

This decline comes despite the CBN’s efforts to stabilize the currency by injecting $122.7 million through dollar sales into the market.

However, analysts argue that these amounts were insufficient to balance the robust domestic demand for the greenback.

“The CBN has been in the market selling $50 million from time to time, which is not enough,” commented Carlo Morelli, senior portfolio manager at Azimut Investment SA.

Morelli attributes the persistent pressure on the naira to capital outflows and a lack of investor confidence in the currency, despite the central bank’s commendable efforts in tightening monetary policy and reducing naira liquidity.

Central Bank Governor Olayemi Cardoso has aggressively raised interest rates in an attempt to curb inflation and stabilize the naira.

The benchmark borrowing rate now stands at 26.25%, following an increase of 14.75 percentage points since May 2022.

However, the currency has weakened by approximately 70% against the dollar since exchange-rate controls were eased last year.

“Restoring foreign exchange broad confidence is the last step, and the huge volatility in May delayed the return to normalcy,” Morelli added.

“Many foreign investors are still waiting for more evidence of stability before considering Nigeria investable.”

The naira’s decline makes it the second-worst performing currency tracked by Bloomberg in 2024, trailing only the Lebanese pound.

The recent depreciation has been fueled by both seasonal dollar demand and ongoing investor skepticism.

The central bank’s next policy decision, set for July 23, is expected to address these issues. Monday’s data showing annual inflation quickened to 34.2% in June suggests that another rate hike might be on the horizon.

In a bid to bolster the naira, the central bank has increased Nigeria’s foreign exchange reserves to $35 billion as of July 8, the highest level since May 30, 2023.

This boost is attributed to recent loans from the World Bank and the African Export-Import Bank.

Omobola Adu, an analyst at BancTrust & Co. Investment Bank, noted that recent pressure on the naira has also stemmed from corporates and individuals preparing for foreign vacations.

“Boosting the supply of FX into the country remains crucial for the government to alleviate pressure on the naira,” Adu stated.

He suggested that a eurobond or local dollar bond sale later this year, along with increased support from multilateral institutions, could help shore up reserves.

Despite these challenges, Central Bank Governor Cardoso remains optimistic, asserting that the worst of the currency’s volatility is over.

He reiterated this sentiment on Thursday in Lagos, addressing business leaders and highlighting improvements in crude output and capital inflows as positive signs.

Nigeria, Africa’s largest crude producer, relies heavily on oil sales, which account for at least 80% of its export earnings.

The country’s combined crude oil and condensate output rose to 1.5 million barrels per day in June, the highest since February, according to the upstream petroleum regulatory commission.

“While the naira may be undervalued, for the naira to stabilize and perhaps regain ground, large portfolio and capital inflows are needed,” said Samir Gadio, head of Africa strategy at Standard Chartered Plc in London.

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