Business

Again, CBN devalues Naira, pegs new exchange rate

Published

1 year ago

June 1, 2023

Again, CBN devalues Naira, pegs new exchange rate

The Central Bank of Nigeria (CBN) has devalued the Naira to N631 to the dollar from N461.6 it sold at the Importers and Exporters (I&E) window the previous day.

The devaluation came 48 hours after President Bola Ahmed Tinubu announced the plans of the federal government to unify the country’s exchange rate to stimulate the economy.

In his inaugural speech, minutes after he was inaugurated as the 16th president of the country, Tinubu said, “Monetary policy needs a thorough house cleaning. The Central Bank must work towards a unified exchange rate. This will direct funds away from arbitrage into meaningful investment in the plant, equipment and jobs that power the real economy.”

There has been a wide margin between the I&E window and the parallel market, a situation that experts say encouraged round-tripping with Bureau de Change operators.

The situation has seen the CBN devise several measures to check the practice as well as completely stop the sale of forex to BDCs.

On Tuesday, President Tinubu met with the top echelon of strategic institutions including the CBN Governor, Godwin Emefiele, at the presidential villa.

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At the end of the meeting, neither the presidency nor Emefiele disclosed the outcome of the briefing. It was, however, gathered that the issue of the exchange rate was discussed at the meeting.

The President also met with the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, Mele Kyari. The removal of petrol subsidy was discussed, it was gathered.

However, findings revealed that at the resumption of the weekly bidding for foreign exchange, the apex bank sold the spot rate to banks on behalf of their customers at N631 to a dollar and most bidders got the full amount they requested.

One of the customers told this paper that they applied and that their request was fully granted at N631 as against N461.6.

The move has also seen prices at the parallel market trend downwards. Checks by this paper revealed that prices dropped from N750 to a dollar in the early hours of yesterday to N745 by evening in Abuja and Kano respectively.

The naira weakened in the parallel market to the lowest level in a year on expectations of a possible change in exchange rate management after Tinubu takes office on Monday.

The naira dropped to N762 a dollar on Friday from 775 the previous day in the unauthorized market in Lagos, said Umar Salisu, a BDC operator who tracks the data in the nation’s commercial capital.

The unit has weakened steadily in the parallel market since last week after stabilizing for most of this year.

The market arbitrage (difference between the official and parallel markets) has widened in the past three years from N100 per dollar or about 30 per cent in 2020 to over N400 per dollar (above 100 per cent) sometime last year when the black market rate spiked to N880/$.

Development institutions, including the International Monetary Fund (IMF), are wary of exchange rate differential in excess of five per cent and warn that such could trigger unhealthy manipulation that could negatively affect other efforts on market stabilisation.

From 2020 to 2022, the CBN spent about $42 billion intervening in the foreign exchange market to stabilise the naira. The amount was sold to the end-users, including students and tourists, at the official rates, which are way off the effective exchange rate of the naira.

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According to the Financial Stability Report, a publication of the CBN, the apex bank sold $9.2 billion in the market in the first half of last year.

The full data for the second half are not available, but the annualised value is assumed to have surpassed that, especially with the level of social and economic activities associated with the second half.

Whereas the black market rate averaged N730/$, the I&E window finished at suppressed N447/$ on average. That puts the arbitrage at N283/$, pushing the CBN’s FX subsidy in the year to about N3.65 trillion.

Realistic exchange rate regime to save N4tr – Ex-DG LCCI

In his analysis on the impact of FX subsidy, Dr Muda Yusuf, the Director of the Centre for Promotion of Private Enterprise (CPPE), said a realistic exchange rate regime would add N4 trillion to the federation account.

The former director general of the Lagos Chamber of Commerce and Industry (LCCI) said the exchange rate regime constitutes an enormous burden to the economy and public finance.

He said: “Nigeria is facing an all-time tight fiscal space. This year’s budget is stuffed with over 50 per cent deficit, even in the face of spurious revenue projections. The federal government is contemplating an additional loan of N8.8 trillion to support funding of the budget, which could raise its outstanding liabilities to nearly N80 trillion.

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However, he adds that there could be some benefits from the devaluation. “If it is perceived to be temporary, it may present attractive opportunities for foreign investors to invest in our domestic financial markets. It is not certain, but it is a possibility that FPI (foreign portfolio investments) inflow to Nigeria may temporarily increase.”

Again, CBN devalues Naira, pegs new exchange rate

Daily Trust

Business

Food price, transport fare hike push Nigeria’s inflation to 33.88%

Published

8 hours ago

November 15, 2024

Trends Admin

Food price, transport fare hike push Nigeria’s inflation to 33.88%

Rising cost of living based on the increase in food prices and transport fares among others has reflected in the latest inflation figures in Nigeria, put at 33.88 per cent.

Nigeria’s headline inflation rate rose to 33.88 per cent in October 2024, up from 32.7 per cent in September 2024, according to the National Bureau of Statistics (NBS) Consumer Price Index (CPI) report released on Friday.

Newstrends.ng observes that the Central Bank of Nigeria (CBN) has raised interest rates five times this year in an effort to rein in inflation.

The NBS in its latest report attributed the rise in inflation to increased transportation costs and higher food prices.

On a year-on-year basis, the rate was 6.55 percentage points higher than the 27.33 per cent recorded in October 2023, highlighting a substantial increase in inflation over the past year.

On a month-on-month basis, the headline inflation rate in October 2024 stood at 2.64 per cent, representing a 0.12 per cent increase from the 2.52 per cent recorded in September 2024

This indicates that the rate of increase in the average price level in October 2024 was higher than the rate of increase observed in September 2024.

Aviation

Disaster averted as bird strike hits Abuja-Lagos Air Peace flight

Published

1 day ago

November 14, 2024

Trends Admin

Disaster averted as bird strike hits Abuja-Lagos Air Peace flight

An Abuja-Lagos flight was on Thursday aborted following a bird strike on the airplane belonging to Air Peace, forcing the authorities to ground the aircraft.

The bird strike experienced in the early hours reportedly prompted a ramp return to ensure the safety of passengers onboard.

All the passengers quickly disembarked and were calmed down before they were moved into another plane for the one-hour journey.

A bird strike is a collision between a bird and an aircraft, or other airborne animal, while the aircraft is in flight, taking off, or landing. And it can be a significant threat to aircraft safety.

Air Peace in a statement by its Head of Corporate Communications, Ejike Ndiulo, said the bird strike occurred at 6:30am, and all passengers disembarked normally.

The statement read, “We wish to inform our esteemed passengers that our Abuja- Lagos 06:30 flight experienced a bird strike before take-off, prompting a ramp return as a safety measure. All passengers disembarked normally.

“We have deployed a replacement aircraft for the affected flight in order to minimize disruptions, thus ensuring that passengers continue their journeys promptly.

“We appeal for the understanding of our valued passengers impacted by this development, as well as those on other flights that may experience delays.

“At Air Peace, we are committed to providing safe, comfortable, and reliable air travel for all our passengers.”

Business

NNPC achieves 1.8mbpd crude oil production

Published

1 day ago

November 14, 2024

Trends Admin

NNPC achieves 1.8mbpd crude oil production

The Nigerian National Petroleum Company Limited (NNPC Ltd) and its partners have revved up crude oil and gas production to 1.8million barrels per day (mbpd) and 7.4standard cubic feet per day (scfd).

The company which announced this at a press briefing said the feat was achieved in compliance with the mandate of President Bola Ahmed Tinubu.

Speaking on the development, the Group Chief Executive Officer, Mr. Mele Kyari, congratulated the Production War Room Team that anchored the production recovery process.

“The team has done a great job in driving this project of not just production recovery but also escalating production to expected levels that are in the short and long terms acceptable to our shareholders based on the mandates that we
have from the President, the Honourable Minister, and the Board,” Kyari explained.

Giving details of the efforts of the Production War Room, the Chief War Room Coordinator and Senior Business Adviser to the Group Chief Executive Officer, Mr. Lawal Musa, disclosed that the feat was achieved through the collaborative efforts of Joint Venture and Production Sharing Contract partners, the Office of the National Security Adviser, as well as government and private security agencies.

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He said the interventions that led to the recovery of production cut across every segment of the production chain with security agencies closely monitoring the pipelines.
He stressed that when the Production War Room team was inaugurated on 25th June 2024, production was at 1.430mbpd, but the team swung into action, culminating into sustaining the production recovery to 1.7mbpd in August and hitting the current 1.808mbpd in November.
“We are confident that with this same momentum and with the active collaboration of all stakeholders, especially on the security front, we can see the possibility of getting to 2mbpd by the end of the year,” he stated.
Also speaking on the development, Chairman of the NNPC Ltd Board of Directors, Chief Pius Akinyelure, who also congratulated the team, said he was happy to be part of the production recovery process, adding: “today, I will leave this place with my heart full of joy”.

He charged the Company’s Management to come up with a cashflow projection based on the new production figures to facilitate planning, stressing that he was looking forward to further production increase to 3mbpd.

On his part, the Honourable Minister of State for Petroleum (Oil), Senator Heineken Lokpobiri, expressed satisfaction with the performance of the team and pledged the Federal Government’s support for the company to do more.