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Forex Intervention: CBN Injects $4.4b Into Fx Market in Two Months

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Forex Weekly Outlook October 31-November 4
  • Forex Intervention: CBN Injects $4.4b Into Fx Market in Two Months

In a bid to sustain dollar liquidity and stimulate growth, the Central Bank of Nigeria sold $4.47 billion in forex between April and May to dealers.

In the report released for the month of May, the CBN sold a total sum of $2.04 billion to forex dealers across the country, while $2.43 billion was injected in April, representing a decline of 16.1 percent and 42.3 percent lower than the corresponding period of 2018.

“The bank continued to intervene in the foreign exchange market to further sustain the improved liquidity and relative stability in the market,” the report read in part.

Sales to the interbank segment declined by 10 percent to $0.09 billion when compared to April sales.

However, sales to the BDC surged 6.3 percent to $1.05 billion during the same month. Swaps transaction was unchanged at $0.01 billion.

According to the CBN, the average Naira exchange rate was N306.95 per US dollar in May.

The report showed forex intervention remains the lifeline of the Naira and further highlights the danger of weak revenue if oil prices drop amid global trade wars and uncertainty.

Meanwhile, the Monetary Policy Committee is expected to leave the key interest rate unchanged at 13.5 percent on Tuesday as the CBN looks to stimulate growth and compel banks to increase credit facility to the private sector.

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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Finance

Banks to Place Chronic Loan Defaulters on Watch List

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Central Bank

The Central Bank of Nigeria on Monday released the guidelines aimed at reducing non-performing loans in the banking sector and monitoring chronic loan defaulters.

The CBN released the guidelines through a circular to all banks and other financial institutions, with the title ‘Operational guidelines on global standing instruction – Individuals.

The circular, which was signed by the Director, Financial Policy and Regulation Department, CBN, said, “The Bankers’ Committee, at its meeting on February 18, 2020, approved the go-live on the Global Standing Instruction, which aimed at facilitating an improved credit repayment culture; reducing non-performing loans in the Nigerian banking system; and watch-listing consistent loan defaulters.”

The apex bank said it collaborated with stakeholders to develop necessary protocols to facilitate a seamless implementation of the GSI process, including eligible loans granted from August 28, 2019.

It stated that the guidelines would take effect from August 1, 2020.

Under the guidelines, creditor bank would ensure that borrowers were properly educated about the GSI mandate and its implications, and enshrine same in their loan application process.

The banks would review and validate the GSI mandate instrument prior to loan disbursement.

It added that they would indemnify the Nigeria Inter-Bank Settlement System and other participating financial institutions from all liabilities that may arise from inappropriate use of the GSI infrastructure.

The CBN stated that the banks would retain copies of physical or digital version of the executed GSI mandate and provide same when required.

The CBN added that the participating financial institutions must execute the GSI mandate agreement with NIBSS.

They must also ensure all qualifying accounts were properly maintained and visible to NIBSS on the industry customer accounts database or by any other service created or provisioned for this purpose.

The guidelines stated that they must “ensure that accounts in NIBSS’ ICAD are correctly tagged with correct Bank Verification Number, and ensure and maintain connectivity to the Nigeria Central Switch.”

The CBN added that they must ‘honour all balance

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Central Bank Restricts Maize/Corn Importation

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godwin-emefiele

CBN Adds Maize/Corn to Foreign Exchange Restriction List

In a bid to stimulate local production and support new job creation, the Central Bank of Nigeria on Monday said it has added maize/corn to the foreign exchange restriction list.

In a statement signed by DR. O.S. Nnaji, director trade and exchange department, and released on the apex bank’s website, the central bank said authorised dealers are directed to discontinue the processing of Forms M for the importation of Maize/Corn with immediate effect.

This means while importers of maize/corn are not restricted from importing the commodity, importers can no longer access forex through the central bank rather they will now have to source for their own foreign exchange from the black market or bureau de change operators.

Accordingly, the central bank said authorised forex dealers are required to submit all registered Forms M for the importation of Maize/Corn before the closing of business on Wednesday for processing.

“All Authorised Dealers are hereby requested to submit the list of Forms M already registered for the importation of Maize/Corn using the attached format on or before the close of business on Wednesday, July 15, 2020.”

The CBN continues to add to its growing forex restriction list to further ease pressure on the dwindling foreign reserves, stimulate local production and boost new job creation.

This is coming a few days after Nigerian Naira plunged to over three years’ low of N465 against the United States dollar on the black market and central bank’s official rate was adjusted to N380 following the inability of the apex bank to sustain N360 per US dollar rate.

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CBN, Banks to Spend N25 Billion Renovating National Theatre

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National Theatre

Bankers’ Committee, CBN to Spend About N25bn on National Theatre

The Central Bank of Nigeria and the Bankers’ Committee on Sunday said they plan to spend as much as N25 billion on Nigeria Creative Centre at the National Theatre, Lagos and three other states in Nigeria.

Godwin Emefiele, the Governor of the Central Bank of Nigeria, who spoke during the official handing over of the National Theatre to the Bankers’ Committee for renovation and upgrade on Sunday, thanked President Buhari for the approval and eventual handing over of properties Bankers’ Committee.

He said: “Given our dependence on crude oil as a major source of government revenue, as well as for our foreign exchange earnings, these challenges have served to reinforce the need for stakeholders to promote policies and programmes that will enable greater diversification of the Nigerian economy.

“A diversified economy that supports increased productivity in agriculture and manufacturing sectors, while harnessing the talents of our youths in the creative industries will lead to the build-up of a more resilient economy, which is better able to withstand external shocks, while creating wealth and jobs for our growing population,” he said.

The CBN Governor, who also doubled as the Chairman of the Bankers’ Committee, said in about 18 months, the Bankers’ Committee would have transformed the facility into Nigeria’s creative industrial centre.

“The creative centre, which comprises music, movies, fashion and ICT, can be a key source of growth for our economy creating up to one million jobs for the country’s teeming youths,” he said, adding that it would also aid the objective of reducing the country’s dependence on revenue from crude oil.

Emefiele explained: “India for example in 2018 generated over $240 billion from exports of IT, movies, music and fashion related goods and services. This amount is over five times our annual earnings from the sale of crude oil. With our human capital resources and an enabling environment that will help harness the creative talents of our youths, Nigeria has the potential to earn over $20 billion annually from the creative industry.

“With the growing demand for Nigerian music, movies and fashion, across Africa and in various parts of the globe, our creative industries are spurring innovation, creating jobs, and helping to shape perceptions of Nigeria, as a nation with a strong spirit of creativity and ingenuity.

“We must do more to encourage the innovative works of these young talented Nigerians as they can make significant contributions to the growth and development of our country.

“Second, given our growing population of close to 200 million people, out of which 60 per cent are under the age of 35, it is imperative that we strive to create opportunities that will keep our youths engaged, as it would portend great dangers for the progress of our nation if we allow these talents go to waste.”

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