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Exchange Rate: CBN to Defend Naira

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  • Exchange Rate: CBN to Defend Naira

The Central Bank of Nigeria (CBN) will continue to defend the Naira against the widely publicised floatation.

Earlier this week, a few media had misinterpreted a possible technology glitch on the CBN website as a move by the apex bank to finally free float the local currency.

Nairametrics had reported that the Naira value will henceforth be determined by market forces, while the Guardian said the CBN may soon allow the local currency to find its value against the current forex policy.

The apex bank, during a Consultative Roundtable with the CBN Governor title:‘Going for Growth’, said the central bank would be disobeying the law by free floating the Naira.

CBN Governor, Godwin Emefiele, said he is committed to protecting the Naira value.

“I am committed to protecting the naira. We cannot allow the naira to float freely,” he said.

He said it would be difficult to maintain low-interest rate, stable exchange rate, healthy foreign reserves, low inflationary environment and improve new job creation with a weak Naira and high inflation rate.

He said: “In fact, I love these and would have less stress in monetary policy if all these are possible. But the question we should ask ourselves at this session is, in the Nigeria of today, are these all possible at the same time?

“Put succinctly, we have watched some so-called economic and financial analysts through televisions and others through the newspapers say that ‘to grow the economy and create jobs, the CBN must allow exchange rate to free float, and also allow inflation to rise; while at the same time allowing interest rates to come down.’

“We have also curiously observed that these analysts have often reached different conclusions from those of the CBN. Again, I am not surprised at these views because most have done so with shockingly limited or outright incorrect information.

“For example, we have watched some armchair analysts demand that the CBN stop ‘defending’ the Naira and simply allow market forces to determine the exchange rate. These analysts simply call for the Naira to be floated. To these analysts, let me remind them that the CBN Act demands that we ‘defend’ the Naira using the foreign exchange reserves. In setting out the five principal mandates of the CBN, Section 2, Subsection C of the CBN Act 2007 reads and I quote “…maintain external reserves to safeguard the international value of the legal tender currency”.

“In effect, the CBN would be disobeying the law establishing it, if it sits idly by and allows the Naira to be determined wholly by the so-called market forces.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market.

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Access Bank in Talks to Acquire Cavmont Bank

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Access Bank to Acquire Cavmont Bank in Zambia

Access Bank Plc on Wednesday announced that its wholly-owned subsidiary in Zambia, Access Bank Zambia Limited (Access Bank Zambia) is in talks to acquire Cavmont Bank Limited, a subsidiary of Cavmont Capital.

According to the statement signed by Mr. Sunday Ekwochi, Company Secretary, Access Bank and released on the Nigerian Stock Exchange website on Wednesday, the ongoing discussions is to acquire 100 percent of Cavmont Capital’s interest in Cavmont Bank.

However, the lender said “there can be no certainty that a transaction will be agreed, nor as to the terms of any such agreement.

“The completion of a transaction would be subject to formal regulatory approvals. Access Bank will be updating the market as appropriate and in accordance with its disclosure obligations.”

The lender, therefore, advised shareholders to exercise caution when dealing in Access Bank’s securities.

Investors King Ltd note: This announcement further threw more lights on the recent purchases of Access Bank’s shares by Herbert Wigwe, the Chief Executive Officer and Managing Director, Access Bank.

The CEO/MD purchased 7.532 million of Access Bank‘s shares in the last one month.

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Mohammed Umar is the New Acting Chairman of EFCC

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Buhari Appoints Mohammed Umar as EFCC Acting Chairman

President Muhammadu Buhari has appointed, Mohammed Umar, the director of operations at the Economic and Financial Crimes Commission (EFCC), as the new Acting Chairman of the agency, according to the NAN.

A top official of the commission confirmed to NAN that Umar has taken charge of the agency following the suspension of Ibrahim Magu, the former acting Chairman.

Ibrahim Magu was suspended by the President on Tuesday following series of allegations bordering on frauds, financial misappropriations and abuse of power.

 

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CBN Spends $11.5bn in Q1 2020 to Support the Economy and Dwindling Naira

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CBN Injects $11.5bn Into the Economy in the First Quarter

The Central Bank of Nigeria (CBN) injected a combined $11.5 billion into the nation’s foreign exchange market to stabilise the economy and support the Naira value in the first quarter of the year.

According to the latest report from the apex bank, the central bank injected $2.96 billion into the nation’s forex market in the month of January. Another $3.39 billion was used to support the economy in February while $4.7 billion was supplied in the month of March, the very month the economy was locked and all operations grounded to curb the spread of COVID-19.

A further breakdown of the report revealed that the Investors and Exporters’ foreign exchange window, Small and Medium enterprises and Invisible segments received a total of $7.23 billion of the $11.5 billion, the Bureau De Change segment received $3.6 billion while the Interbank and WDAS/RDAS got the rest in the first quarter.

The report noted that the apex bank injected a total sum of $14.72 billion and $28.55 billion into the economy in 2018 and 2019, respectively.

Meanwhile, the central bank is yet to commence the sales of forex to the bureau de change following the March suspension.

But has commenced partial sales to all commercial banks for onward sales to parents and small businesses across the country.

Mr Isaac Okorafor, the Director, Corporate Communications, CBN, had said, “The CBN has also made complete arrangements to resume foreign exchange sales to the BDC segment of the market for business travels, personal travels and other designated retail uses, as soon as international flights resume.”

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