Nigerian Currency Rises to N385.75 Against US Dollar on Thursday
The Nigerian currency, Naira, improved at the Investors and Exporters foreign exchange window on Thursday, according to the FMDQ Group data.
The data showed the Nigerian currency opened the day at N387.50 to a US dollar before hitting N390 during the trading hour and gradually moderating to as low as N375.
The Nigerian Naira eventually closed at N385.75 to a US dollar.
Daily turnover declined from $31.81 million on Wednesday to $12.45 million.
On the parallel market the Nigerian currency traded at N450 to a US dollar, the same rate it was exchanged on Wednesday. Similarly, the naira was unchanged against the Euro single currency at N485.
The Naira, however, declined against the British pound to N550, N2 lower than the N548 it was exchanged on Wednesday.
Nigerian currency remained largely flat ahead of president Muhammadu Buhari June 12 speech. This is expected to change next week when businesses might have digested both the speech and the N10.81 trillion revised budget approved by the Senate on Thursday.
The Federal Government increased the budget from N10.5 trillion to N10.81 trillion despite the current shortfall in revenue generation and global uncertainty.
Vice-President Osinbajo led committee on Economic Sustainability predicted that Nigeria could have as much as 39.4 million unemployed people due to the COVID-19 pandemic. The committee predicted that the nation’s unemployment rate could hit 33.6 percent from the current 23.1 percent.
Therefore, advised the president to increase new job creation and enhance intervention to support businesses.
Naira Drops N2 on Black Market Even With 11.5% Interest Rate
Naira Declines on Black Market Despite Lower Interest Rate
Nigerian Naira traded at N467 to a US dollar on the back market on Wednesday despite the Central Bank of Nigeria’s led monetary policy committee lowering the interest rate by 100 basis points after months of saying NO.
The local currency declined by N2 from N465 it exchanged on Tuesday to N467 on Wednesday as investors doubt the new interest rate would be effective given the size of the nation’s economic woes.
Also, the central bank rate adjustment was seen by most as recession validation. Experts and even the apex bank had predicted that except the nation recorded strong growth in the third quarter, Nigeria would slide into recession for the second time in four years.
This was after Nigerian currency was devalued twice to accommodate the nation’s weak foreign reserves in the wake of low oil prices and the drop in demand for the commodity.
Since then, the central bank has injected a total sum of N3.5 trillion into the economy to mitigate the negative impact of COVID-19 on the nation and support gradual improvement in productivity.
However, the decision of the Federal Government to raise electricity tariffs and remove petrol subsidy at a time when 27.1 percent of the working population or 21.8 million people are out of jobs with COVID-19 eroding consumer buying power, further weighed on sentiment and send the wrong message to potential investors and businesses.
Against, the British pounds the Nigerian Naira traded at N600 while it was exchanged at N545 to a European Union common currency.
With labour declaring a nationwide industrial action starting from Monday September 28, Nigeria’s detoriating economic outlook may further plunge the Naira value against global counterparts.
Naira Remains Pressure at N465/US$ Despite BDCs Expecting $50.9m from CBN
Naira Remains at N465/US$ Despite BDCs Expecting $50.9m Injection from CBN
The Nigerian Naira remained under pressure despite the Central Bank of Nigeria’s foreign exchange sales to the bureau de change operators (BDCs).
Since the apex bank resumed forex sales about two weeks ago, the local currency had only improved slightly against global counterparts as investors and businesses doubt the central bank’s ability to sustain forex intervention given the weak foreign reserves and low oil prices.
Two weeks ago, the apex bank injected $51.8 million into the foreign exchange market to ease scarcity and support Naira’s value, however, despite the amount injected, the local currency only moderated slightly from N480 to a US dollar to N443 before depreciating back to N465 following the increase in electricity tariff and complete subsidy removal.
In what appeared like investors have started pricing in a further decline in consumer spending, especially with inflation hovering above 13 percent and expected to rise further with an increase in prices.
Also, Nigeria’s unemployment rate remained high at 27.1 percent, meaning apart from weak revenue generation and definitely low tax revenue, businesses will not be creating enough jobs to cushion the impact of COVID-19 on the economy.
A situation expected to further weigh on Naira outlook against global counterparts, even with central bank forex sales.
The Naira exchanged at N465 to a US dollar on Tuesday despite Bureau de change operators expecting $50.9 million forex allocation from the central bank today. This means, the market no longer expect a meaningful impact from the apex bank intermittent intervention because of the disparity in the amount being injected and forex backlog estimated at slightly over $5 billion.
CBN Moves Against 55 Companies, Individuals for Forex Infractions
CBN Commences Investigation into FX Activities of 55 Companies, Individuals
In an effort to ease foreign exchange pressure and better manage the dwindling foreign reserves, the Central Bank of Nigeria has intensified fight against companies and individuals taking advantage of the nation’s limited foreign reserves.
The apex bank said it has commenced investigations into the activities of 55 companies and individuals engaging in foreign exchange transactions.
The central bank attributed the reason for the investigation to foreign exchange deals outside the official Investors & Exporters (I&E) forex window.
Some of the companies being investigated are Stallion Nigeria Limited, Interswitch Nigeria Limited, as well as a leading global shipping line, CMA CGM Nigeria Shipping Limited.
Other big names on the list are Petro-Afrique Energy Services Limited, Steel Force Far East Limited, Auto Petroleum Company Limited, Cavendish Mechanicals Limited, Aquashield Oil & Marine Limited, Haitch & Elf Integrated Services Limited, Fenog Nigeria Limited, and Promasidor Nigeria Limited.
The I&E window was established to facilitate foreign exchange transactions and encourage a moderate market-determined exchange rate.
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