The total amount of money spent on education and medical services abroad between 2010 to 2020 is more than Nigeria’s current foreign reserves of $39.51 billion, according to the latest report from the Central Bank of Nigeria (CBN).
The search for greener pastures is not a term new to Nigerians and for many reasons, Nigerians travel from country to country seeking better lives for themselves. However, according to a report by the Central Bank of Nigeria, this search for better lives is facilitating the fall of Nigeria’s local currency in the exchange market.
According to the apex bank’s Balance of Payment report, Nigerians spent a total of $39.66bn on foreign education and healthcare-related services between 2010 and 2020.
The report further broke down the figures to reveal that Nigerian parents/guardians spent $28.65bn on foreign education while Nigerians spent $11.01bn on healthcare services in foreign countries. This is more than Nigeria’s foreign reserves of $39.51 billion.
Investors King observed the implication of this figure in the CBN report titled “A Simple and Factual Explanation of Nigeria’s Exchange Rate Dynamics.”
The value of the US Dollar in Nigeria is determined by the force of demand and supply, and with the number of Nigerians studying abroad, the demand for the U.S Dollar has increased exponentially while supply remained low due to a series of structural issues like weak foreign revenue generation, tough business environment, and poor economic policy.
The report noted that the number of foreign exchange requests received by Nigerian Banks is mostly for Primary and Secondary education from neighbouring countries while revealing that between 1998 and 2018, the number of Nigerians studying abroad increased from 15,000 to 96,702.
Also, the CBN report also disclosed that the demand for the dollar had exceeded its supply by about $18.45bn while also revealing that oil export – which accounts for over 90 percent of Nigeria’s foreign exchange earnings – had fallen from $93.89bn in 2011 to $31.4bn in 2020.
The Naira, has, however, maintained a bit of stability over the past month owing to a number of policies that the CBN has introduced. Although this doesn’t take away the fact that the currency is struggling in the exchange market and one way to curb this or reduce this is for Nigerians to establish commodities in products and services that the rest of the world will be willing to buy, which will, in turn, churn in the supply of dollars into the Nigerian economy.
Naira Exchange Rate Dips at Official Market and Black Market
The Nigerian Naira opened the week lower against the United States Dollar at the Investors and Exporters (I&E) foreign exchange window now adopted as the official forex window and also at the black market.
The local currency opened at N417.30 against the United States Dollar before declining by 0.60% to close the day at N421.50/$ at the I&E window. Forex traders at the window transacted forex worth $70.68 million on Monday.
For banks and international money transfer operators, the Central Bank of Nigeria buys US Dollars at N414.75 and sells at N415.75. The apex bank buys and sells Pounds Sterling N508.2761 and N509.5016, respectively. For the European common currency, the Euro, the central bank sold it at N433.0453 and acquired it at N432.0036 a unit.
At the parallel market popularly known as the black market, the Naira was exchanged at N599 for a United States Dollar in Abuja.
Speaking on why the exchange rate is that high, Abu Abdullahi, a currency trader at Zone 4 in Abuja, said demand for the U.S. Dollar is high despite persistent scarcity.
Crude oil extended its gain in the early hours of Tuesday on optimism that China, the world’s largest importer of the commodity, would see substantial demand recovery after the latest data pointed to slowing COVID-19 infections in the hardest-hit areas.
Brent crude oil, the international benchmark for Nigerian crude oil, gained $2.69, or 2.4% to $114.24 a barrel at 5 am Nigerian time. The U.S. West Texas Intermediate (WTI) crude rose $3.71, or 3.4%, to $114.20 a barrel, Investors King understands.
“We are seeing a lot of signals that demand will start returning in that region, supporting higher prices,” said Bob Yawger, director of energy futures at Mizuho.
Finally, Bitcoin and other cryptocurrencies shake off Luna-led decline to pare losses on Tuesday. Luna Foundation Guard (LFG) announced in the late hours of Monday that it was discontinuing Luna Coin and stablecoin (UST) operations to launch a new blockchain protocol that would focus on developers and building in general.
The announcement marked the end of one of the most promising cryptocurrency projects and once again reminds the world of how vulnerable the cryptocurrency space is — regardless of what creators say.
Bitcoin gained 1.99% to $30,366 per coin while Eth, a token of Ethereum, XRP (token of Ripple) and Solana appreciated by 3.15%, 3.25% and 4.39% to close at $2,084.27, $0.431744 and $55.86, respectively.
Black Market: Dollar to Naira Exchange Rate Remains Under Pressure
1 dollar to naira today on the black market was N585 and purchased at N590 in Ibadan and Lagos
The Nigerian Naira remained under pressure against global counterparts in the Nigerian unregulated parallel market, popularly known as the black market. $1 dollar to naira today on the black market was N585 and purchased at N590 in Ibadan and Lagos.
At the Investors and Exporters’ forex window, the Dollar to Naira exchange rate dipped by 0.24% to N419 from N417.70 it exchanged on Thursday.
For the interbank market, Investors King observed that the Nigerian Naira remained largely unchanged at N415.74 against the U.S. Dollar.
Bitcoin to Naira exchange rate remained subdued as the uncertainty surrounding the cryptocurrency space surged to a record-high following about a 99% plunge in the value of Terra Luna Coin and its stablecoin, UST.
Bitcoin to Naira exchange rate dropped by 1.49% in the last 24 hours to N17.859 million. While Eth, a token of the Ethereum protocol dipped by 0.34% to N1.232 million, down from about N2 million it traded a few weeks ago.
The uncertainty in the cryptocurrency space also dragged on the Binance coin (BNB) as the coin of the world’s leading cryptocurrency exchange platform moderated to N179,834 a coin, a 0.50% decline in its value.
Luna, the cryptocurrency that once again alerted the world to the vulnerability of unregulated space, is presently trading at N0.120 per coin, down from about N57,000 it was trading a week ago.
Oil prices fell on Monday as the uncertainty surrounding China, the world’s second-largest economy, continues to drag on the commodity outlook.
Brent crude, the benchmark for Nigerian crude oil dipped by 0.7%, or 72 cents to $110.83 per barrel at 11:45 am on Monday. While the U.S. West Texas Intermediate (WTI) oil fell by 0.5%, or 58 cents to $109.91 a barrel.
The decline was a result of the prolonged COVID-19 lockdown in china. China, the world’s largest importer of crude oil, is said to have instituted lockdown restrictions in about 46 cities to curb the spreading COVID-19.
However, this lockdown has started disrupting China’s economic activity as retail sales contracted by 11% while factory production dropped by 2.9% in the month of April.
Experts are now predicting that despite Russia’s sanction, crude oil prices could drop further if the Chinese lockdown persists.
Africa, World to Enjoy More Payment Satisfaction Through eNaira – CBN says
The Central Bank of Nigeria (CBN) has said the adoption of its Central Bank Digital Currency (CBDC) known as eNaira will deepen financial inclusion
The Central Bank of Nigeria (CBN) has said the adoption of its Central Bank Digital Currency (CBDC) known as eNaira will deepen financial inclusion, ease the nation’s payment bottleneck and support transborder transactions across Africa and beyond.
Godwin Emefile, the governor of the apex bank disclosed this on Monday while receiving Bank of Uganda delegates, who were on an experience sharing tour of the Central Bank Digital Currency (CBDC), in Abuja.
He said, “the CBDC would enhance the relationship between mobile banking and e-business and speed up the rate of financial inclusion.”
“The eNaira, being the first of its kind for a large country like Nigeria, was attracting the interests of many countries, Uganda inclusive.
“We’ve been receiving enquiries from various Central Banks in different parts of Africa and the world, trying to understand what we are doing in the area of CBDC. We are happy that the IMF and World Bank have recognised what we are doing in the area of CBDC.
“However, the country has deepened its payment system infrastructure, and is ranked among the best in the world.”
What it is
Earlier in October 2021, Investors king reported that the Central Bank of Nigeria launched the eNaira, after over 20 days of supposed launch.
The eNaira is a Central Bank Digital Currency backed by law and issued by the CBN as a legal tender. It is the digital form of the Naira used as cash.
The Digital currency was introduced to provide high‐value and time‐critical payment services to financial institutions, and ultimately serves as the backbone for every electronic payment in Nigeria,” President Muhammadu Buhari said.
Nigeria became the first country in Africa and one of the first in the world to introduce a digital currency to our citizens, according to Investors king.
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