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Nigeria’s Foreign Exchange Reserves Plunge to 8-Month Low

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  • Nigeria’s Foreign Exchange Reserves Plunge to 8-Month Low

Falling capital importation and weak business sentiment continued to weigh on Nigerian foreign reserves, according to data from the Central Bank of Nigeria (CBN).

Nigeria’s Foreign Exchange Reserves dropped below $42 billion for the first time in eight (8) months. As contained in the data, the external reserve stood at $41.99 billion as of October, 31, after reaching a record high of $47.865 billion on May, 10.

Mr Isaac Okoroafor, the Director, Corporate Communications of the Central Bank of Nigeria, earlier explained, September, that the higher yields in the United States, have brought about the plunge in the Foreign Exchange Reserves.

The Director, Corporate Communications of the CBN, further reassured, that the reserves will be sufficient for the three-month standard recommendation; being that as at $44 billion, the external reserves were enough for Nigeria’s import bills, for a period up to Seventeen (17) to Twenty (20) months.

“The drop in our forex reserves is basically as a result of the capital flow reversals arising from rising interest rates in the United States. You will recall that the Federal Reserve has been raising rates and has even given guidance that this would continue in the near term,” Mr Okoroafor also said.

However, Mr Godwin Emefiele, the Central Bank Governor, at the International Monetary Fund (IMF) annual meeting in Bali, on September, pointed out that Nigeria had the choice of either building foreign reserves or having a stable currency; he remarked that the latter was preferable.

The CBN left interest rates unchanged during the last monetary policy in Abuja to sustain capital importation and curb rising inflation rate.

According to the apex bank, consumer prices are expected to pick up between the final quarter of the year and first quarter of 2019 due to election spending and 2018 budget implementation.

Therefore, it is likely the apex bank will raise interest rates during the final quarter of the year.

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Finance

PoS Transactions Decline by N97 Billion in April

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PoS Transactions Depreciated by N97bn in the Month of April

The Central Bank of Nigeria (CBN) said payments across the nation’s point of sale terminals declined by 26.2 percent in April when compared to March.

The federal government had imposed a lockdown on activities in Lagos, Ogun and Abuja on March 31, 2020 to curb the spread of the COVID-19 pandemic in Nigeria.

The lockdown weighed on economic activities and plunged PoS transactions by N96.7 billion in the month of April.

In the report put together by the central bank, data covers cheques, ATM, PoS, E-bills and NIP transactions for the month of April and excluded channels such as Web, Mobile, and NEFT.

The data collected by the apex bank showed the total volume of transactions declined from 251.9 million in March to 186.6 million in the month of April. The lowest since February 2018 when the volume of e-payments drops to 159.9 million.

Similarly, transaction values dipped by N4.6 trillion or 37.7 percent from N12.3 trillion in March to N7.6 trillion in April.

A break down of the report shows the value of PoS transactions depreciated by N96.7 billion or 26.2 percent from N368.9 billion in March 2020 to N272 billion in April.

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Government Deficit Spending Rises by 144% to N609bn in Two Months

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Deficit Spending Rises by 144% to N609bn in January, February

Federal Government deficit spending rose by 144 percent year-on-year in the first two months of the year to N650 billion, up from N250 billion in the same period of 2019.

In the monthly economic report released for the months of January and February 2020 on Tuesday, the Central Bank of Nigeria said the sharp increase was due to a 54 percent increase in the Federal Government’s expenditure from N798.9 billion in the corresponding period of 2019 to N1.22 trillion in 2020.

The report also noted that the increased erased the 13 percent increase recorded in retained revenue from N548.9 billion in the same period of 2019 to N619.3 billion in January and February 2020.

Breaking down fiscal activities, the CBN said “At N325.54 billion, the estimated Federal Government retained revenue for the month of January 2020 was below the monthly budget of N705.44 billion by 53.9 per cent.

“At N587.05 billion, the estimated total expenditure of the Federal government was below the monthly budget estimate of N865.31 billion by 32.2 per cent. It was also below the N757.07 billion recorded in the preceding month by 22.5 per cent.

“At N293.80 billion, the estimated Federal Government retained revenue for the month of February 2020 was below the monthly budget estimate of N705.44 billion by 58.4 per cent.

“At N641.08 billion, the estimated total expenditure of the Federal Government was below the monthly budget estimate of N865.31 billion by 25.9 per cent. It was, however, above the N587.05 billion recorded in the preceding month by 9.2 per cent.”

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AfDB Appoints Rabah Arezki As Vice President

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The African Development Bank Group has appointed Rabah Arezki as Chief Economist and Vice President, Economic Governance and Knowledge Management.

The appointment takes effect from October 1, 2020.

According to a press release from the Bank, Dr. Rabah Arezki hails from Algeria and his presently the Chief Economist for Middle East and North Africa Region at the World Bank.

At the World Bank, he led the development of the bank’s “moonshot approach” for the Middle East and Africa which aims to achieve full internet and digital payment connectivity. He championed the agenda on fair competition, data and transparency to empower and unlock the potential of the region’s youth.

Arezki started his career at the International Monetary Fund as an Economist and became the Chief of the Commodities and Environment Unit in the Research Department.

provided leadership on IMF’s rapid response to the historical collapse in oil prices that started in 2014..

He is a senior fellow at Harvard University’s John F. Kennedy School of Government, an external Research Associate at the Oxford University, UK, a research fellow at the CESifo, a global independent research network. Mr Arezki is also a resource person for the African Economic Research Consortium and a Research Fellow at the Economic Research Forum.

He has been a non-resident Fellow at the Brookings Institute, USA.

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