Speculators, Currency Hoarders to Lose N10bn Once CBN Starts FX Sales
Following the continuous fall in the value of the Nigerian Naira, the Association of Bureau De Change Operators of Nigeria (ABCON) has said the speculators and currency hoarders behind the present fall in the value of the nation’s currency will lose billions when the Central Bank of Nigeria begins forex sales to the Bureau De Change Operators.
A report published by the association revealed that currency speculators and hoarders are taking advantage of the coronavirus pandemic to manipulate the market through spurious demand for personal gain.
This, the association said would eventually lead to severe losses like in 2016 — during the nation’s first economic recession in 25 years.
The association put projected losses at over N10 billion if speculators fail to desist from rates manipulation.
The report said, “Like in 2016 currency crisis, the market got a major relief after the BDCs’ began getting dollar allocations from the CBN.
“That same scenario will soon play out as the CBN team and ABCON management begin to count days for the BDCs return to the market.
“The CBN has come to realise that BDC operators can be the difference between naira recovery and depreciation during volatile and uncertain times.
“That is especially true now that the local currency has come under intense pressure that is purely driven by speculative demand for the dollar.
“The BDCs are essentially operators that help get dollars to the end users no matter where they are and have for decades proved their relevance in stabilising the naira.”
Alhaji Aminu Gwadabe, the President, ABCON, licensed bureau de change operators would soon start selling forex as the apex bank is already perfecting its plan to begin sales for onward sales to approved end-users.
Gwadabe said, “The return of over 5,000 BDCs to the forex market will add great strength to the naira and lead to major capital losses for forex speculators.
“It happened in 2016 and will happen again in 2020. The return of the BDCs will immediately boost naira recovery and put the enemies of the economy to shame.
“We are committed to the CBN’s exchange rate stability and will take all necessary steps within set rules and regulations to keep the naira stable.”
The Naira traded at N455 against the US dollar on Monday at the black market, while it was exchanged at N386.75 on the investors and exporters’ forex window.
The central bank stipulated official rate remains N361 to a US dollar.
Zenith Bank Joins Other Banks to Cap International Spend Limit at $100/Month
Zenith Bank Caps International Spend Limit at $100 Per Month
Following persistent forex scarcity impacting the nation, Zenith Bank has joined other deposit money banks capping international spend limits.
In an e-mail to customers, the lender said “Please be informed that the monthly international spend limit for your Zenith Bank Naira Card has been reviewed to US$100 while the use of Zenith Bank Naira cards for international Automated Teller Machine cash withdrawals is still temporarily suspended.’
It added that this review is in response to change in Nigeria’s macroeconomic factors.
The bank, however, advised those with higher international spend requirements than the US$100 stipulated above to visit any Zenith branch and request a foreign currency debit or prepaid card “which are available in US Dollar, Pounds and Euro variants.”
This is coming a few weeks after UBA, GTBank, First Bank and others capped their international spend limits to $100 for similar reasons. However, Zenith’s decision was after the Central Bank of Nigeria commenced forex sale to the Bureau De Change Operators across the country.
Nigeria’s Foreign Exchange Inflows Decline by 43.2% in May
CBN Says Foreign Exchange Inflows Decline to $5.52bn in May
The total foreign exchange inflows into Nigeria in the month of May declined by 43.2 percent, according to the Central Bank of Nigeria’s report.
The report said the COVID-19 pandemic negatively impacted capital inflows during the month as the total foreign exchange inflows dropped to $5.52 billion.
It said “Inflows through the CBN and autonomous sources were negatively impacted.
“On a month-on-month basis, foreign exchange flows into the economy declined to $5.52bn in May 2020.
“The decline in inflow, relative to the level in April 2020, was attributed to the lower receipts from oil sources, which fell sharply by 55.2 per cent because of the continued fragility in global crude oil demand.
“Inflow through autonomous sources, particularly invisible purchases, declined by 7.0 per cent to $3.51bn, relative to the preceding month, while there was a 66.2 per cent fall in inflow through the CBN, which stood at $2.01bn in May 2020.”
However, foreign exchange outflows from the country declined by 23.9 percent to $2.50 billion in the month. Likely because of forex scarcity and the central bank forex rate adjustments that curbed outflows by foreign investors.
A break down of the report showed that outflow through the apex bank declined by 30.9 percent to $2.19 billion, below what was recorded in April.
But outflow through autonomous sources, mainly imports and Invisibles, rose by 152.2 percent to $0.32 billion. Higher than the amount reported for the month of April.
ECOWAS Slows Down on Eco Launch, Says Now Adopting Gradual Approach
ECOWAS Halts Eco Launch, Says New Launching Date Will Be Announced
The Economic Community of West African States (ECOWAS) on Tuesday said it has postponed the planned launch for Eco, its single currency.
In a communiqué issued at the end of the 57th Summit of the Heads of State and Government of ECOWAS held on Tuesday, member states agreed to adopt a gradual approach for the launching of Eco given changes in economic fundamentals of member states.
They said a new road map for the launching would be announced and that member states are exempted from compliance with the body’s convergence criteria in 2020. Again, suggesting the negative impacts of COVID-19 on member states have forced the body to adopt a new launching approach, especially with most member states not meeting convergence criteria before the pandemic.
The communique read, “Member states are to be exempted from compliance with the convergence criteria in 2020, while also developing a new macroeconomic convergence and stability pact among the ECOWAS member states.”
President Muhammadu Buhari, who attended the summit, warned that the whole project could face serious jeopardy unless member states complied with agreed processes of attaining the body’s collective goal.
Buhari also expressed concern over Francophone countries within the West African Economic and Monetary Union adopting Eco as a replacement for CFA Franc ahead of the rest of member states.
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