- Domestic Airlines Seek $50m Grant From CBN’s Special Forex Window
Domestic airline operators in the country have appealed to the Central Bank of Nigeria (CBN), to allot the local industry at least $50million grant from the foreign exchange (forex) special intervention programme.
The airlines, while commending the take-off of the programme, said domestic operators deserved equally wider forex window like their foreign counterparts, given their more important role in development of the local economy.
Recall that the CBN, following agitations by stakeholders, in October intervened in the inter-bank forex market, granting concession to some sectors, through forward settlement. Besides aviation, raw materials and machineries for manufacturing companies and agricultural chemicals are other beneficiaries.
The CBN’s Special Secondary Market Intervention Sales (SMIS) is, however, a one-off exercise dedicated to the clearance of the backlog of matured forex obligation for airlines, especially the international carriers that have funds stuck in Nigerian.
The Guardian yesterday learnt that the forex bidding processes opened about two weeks ago, with invitation sent to the airlines to place their request. Some airlines, however, could not meet the deadline as the invitation allegedly came without prior notice and closed too soon.
For airlines that made submission, on the basis of naira, they could immediately pool their forex grants expected within 60 days. Chairman of Arik Air, Joseph Arumemi-Ikhide, said considering the need of the local airlines, they deserved more than what they had been given in the short period that the window was opened for bidding.
Arumemi-Ikhide stressed that all activities of the airlines, from maintenance to fuel and other services are denominated in foreign exchange.
He said while the foreign airlines were being given more forex grants on account of their funds stuck in the Nigerian economy, the domestic airlines are more important to the economy since the money remains in the Nigerian system.
According to him, “That is why we are asking for better allocation that should also be a regular programme instead of one-off and the sudden approach. CBN should give us between $40million and $50million to grow the economy.
“Foreign airlines are collecting the money to take back to their country and pay salaries of their people overseas. We are the ones that remain here to benefit the system.
“We also have money stuck everywhere, we are not making noise about it. Arik’s money is in Angola and West African countries, why didn’t the International Air Transport Association (IATA) speak for the repatriation of our funds? It behoves upon us all to support our own and stop favouring foreign airlines against those that are ours,” he said.
The chairman noted that since former President Olusegun Obasanjo, no other administration has been bold enough to support and promote domestic airlines, but often quick to unfairly condemn them as weak.
Executive Vice President of Arik, Chris Ndulue, said while the forex intervention is good for the industry, it should be made available on continuous basis to the beneficiaries.
Chief Executive Officer of Med-View Airlines, Muneer Bankole, had also commended the initiative, with optimism that its implementation would upturn the fortunes of the aviation industry.
Bankole said: “The currency is actually the backbone of airlines, as it is all over the world. It has to be dollar denominated and the situation here has not helped the sector. We have cried out to the government to build an environment and a window in the Central Bank for the airlines to access, for relief. So, it is good that the intervention is coming but has to be properly done to benefit all,” he said.
Barclays Tell High Net Worth Investors to Shun Africa and Other Emerging Economies
Barclays to High Net Worth Clients, Stay Off Africa and Other Emerging Economies
Barclays, one of the world’s largest investment banks, has started advising high net worth clients to stay off Africa and other emerging economies.
According to Barclays, despite the recent recovery noticed in emerging-market stocks, investors are better off avoiding the risks that still abound in emerging nations. Barclays Plc, however, advised high net worth clients to focus on U.S equities despite the S&P’s breakneck rally.
The investment bank said emerging economies do not have enough fiscal buffers to spend their way out of the COVID-19 pandemic and will likely continue to struggle in the near-time compared to the US with 12 percent of gross domestic product fiscal-support.
It said the huge US stimulus may halt rebound in emerging-markets stocks as more money is expected to flow into the world’s largest economy and its European counterparts.
“Compared to the U.S., emerging-market economies appear more vulnerable,” said Haider, the London-based managing director and head of global growth markets. “Their central banks have less room to maneuver, their governments may not be able to provide unlimited support and equity markets, given their sector mix, can be more challenged by an economic slowdown.”
Barclays added that even after 33 percent rebound in stocks of emerging markets since the panic selloff subsided in March, stocks are still down by 9 percent from year-to-date while the US S&P 500 stocks are up by 45 percent. Presently, their stocks trading at a 36 percent discount to US stocks, up from 25 percent three months ago.
Crude Oil Rises to $43.1 Per Barrel on Production Cuts Extension
Crude Oil Hits $43.1 Per Barrel Following OPEC’s Production Cuts Extension
Brent crude oil, against which Nigerian oil price is measured, rose by 1.25 percent on Monday during the Asian trading session following OPEC and allies’ agreement to extend crude oil cuts to the end of July.
OPEC and allies, known as OPEC plus, agreed to extend production cuts of 9.7 million barrels per day reached in April to July on Saturday.
In the virtual conference, delegates agreed that members, including Nigeria and Iraq presently struggling to attain a 100 percent compliance level must keep to the agreement or be forced to do so in subsequent months.
Nigeria, Iraq and others failed to keep to the cartel’s agreement in May after reports show that Nigeria only managed to attain a 19 percent compliance level during the month while Iraq struggled to attain just 38 percent in the same month.
Russia and Saudi Arabia, the two largest producers of the group, warned members to stick to the agreed quota if they want to rebalance the global oil market.
“While the errant producers such as Iraq and Nigeria have vowed to reach 100% conformity and compensate for prior underperformance, we still think they will likely continue to have some commitment issues over the course of the summer,” said Helima Croft, head of global commodity strategy at RBC Capital Markets.
“The potential return of Libyan output could also cause considerable challenges for the OPEC leadership.”
Earlier on Monday, Brent crude oil hits $43.1 per barrel, more than a month record-high, before pulling back slightly to $42.83 per barrel.
Gold Dips by 2 Percent on Better Than Expected Job Report
- Gold Dips by 2 Percent on Better Than Expected Job Report
Gold prices declined by 2 percent on Friday following a better than expected US non-farm payroll report.
The report showed an increase of 2.5 million payroll numbers against a decline of 7.5 million predicted by many experts.
The surprise number boosted investors’ confidence in US recovery as many dumped their haven investment (gold) for the stock market.
“We had significantly stronger-than-expected U.S. payroll numbers – an increase of 2.5 million versus an expectation of a decline of 7.5 million – that 10-million swing has brought forward expectations of the economic recovery in the United States,” said Bart Melek, head of commodity strategies at TD Securities.
Spot gold immediately declined by 1.9 percent per ounce to $1,678.81 while the U.S. gold futures slid 2.6 percent to settle at $1,683.
Gold was also being pressured by stronger yields and a slightly firmer dollar, “meaning the opportunity cost to hold gold in the portfolio has gone up,” Melek added.
The surprise didn’t stop there, US Dow Jones was up 614 points despite the protest going on the US and US-China tension.
Also, NASDAQ rose by 29 points while the S&P index added 50 points increase.
Note: Investors generally increase their investments in gold and other haven assets during a crisis to avert risk exposure and do the opposite once they sense a better economy.
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