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Passengers Groan Under Dollar Scarcity, Hoarding at Airports

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  • Passengers Groan Under Dollar Scarcity, Hoarding at Airports

Air passengers were thrown into confusion at the weekend when Bureau de Change (BDC) outlets at international airports nationwide declared foreign exchange, especially dollar, out of stock.

Notable BDCs like Travelex, Sulah, Bossy Clean Exchange and Ibro Resources that had often sold at about N400 to a dollar, all declared “no dollar” to all outbound passengers.

Intending passengers travelling on business trips were forced to devise alternative means to go on with their travel plans or simply returned home after loitering around the unyielding BDCs.

Travel agents, who blamed the BDCs for hoarding, were worried about the development, describing it as “killing” to the air travel business and loss of revenue to parties concerned.

A visit to the Murtala Muhammed International Airport (MMIA), Lagos, yesterday revealed that though the BDCs were open to customers, none of them was ready to sell. Electronic boards indicated “we buy N398 to $1” and “sell for N400 to $1.” Except for Travelex that boldly pasted: “Sorry, we are out of stock”, others merely turned back travellers with “no dollar” response.

An official of Sulah BDC said they had no dollar to sell because “people have failed to sell to us.”

A Dubai-bound passenger, Elizabeth, said the BDCs had often been the most reliable source for travellers to get dollar and at comparatively good rate, but was surprised to find them with no stock since last week.

She said: “I’ve been searching for a dollar equivalent of just N4 million since last week. I was actually prepared to travel only to find that there was no dollar anywhere. Ordinarily, Travelex would still have given $1000 if you can prove that you are travelling and go on to buy from others at higher rates. This time, none of them wanted to sell a cent. It is so pathetic.”

Meanwhile, on the streets and outside the airport, mobile BDCs otherwise called mallams were selling in trickles of $100 at N510 to N550.

Eniola Adesanya, who is bound for United States, had to do “trade by barter” with some overseas-based family members planning to send some money to their relatives in Nigeria.

Adesanya said the method was her saving grace. “I had to start calling them to ask if they plan to send money to Nigeria. It is like giving them a loan, which I have paid to their relatives here. So, they will give me a refund in dollar in the United States.

“It was through the same means that I bought a ticket from the U.S. There is no dollar here and the airline is not accepting naira for purchase. My method is funny, but otherwise I would still not be able to travel, as the visa will soon expire. It is so crazy around here. May God have mercy,” she said.

The President of the National Association of Nigerian Travel Agencies (NANTA), Bernard Bankole, blamed the situation on artificial scarcity that should not have happened in an ideal setting.

According to Bankole, “There is no reason for this scarcity because the official rate has not moved and the rate we get tickets has not gone up either. The official rate is still at N305 or N306 and the black market is doing at N520 to N525. But the round tripping has increased. So, people are envisaging that there may be devaluation so that they can make more money. That is the unfortunate situation.

“The Central Bank of Nigeria (CBN) is holding the country to ransom, and it is a shame. I believe if they have lost how to manage their forex policy, they should just resign and go away, rather than put the whole nation to shame. Because that is exactly what we are seeing now,” he said.

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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Investment

Barclays Tell High Net Worth Investors to Shun Africa and Other Emerging Economies

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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.

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Economy

Crude Oil Rises to $43.1 Per Barrel on Production Cuts Extension

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  • 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.

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Economy

Gold Dips by 2 Percent on Better Than Expected Job Report

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  • 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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