Business

N1000/$: The Fall and Fall of the Naira

Published

7 months ago

September 23, 2023

Eric

By Eric Elezuo

This is not the best of times for the Nigerian Naira as market forces continue to work to its detriment, leading to a rush for the few available Dollars, and in turn falling to all time low.

On Thursday, a Bloomberg report quoted one Yahaya Adamu, a currency dealer in Wuse, a suburb of the nation’s capital, Abuja, Traders in Abuja as saying that the dollar was quoted at N998, just N2 short of N1000.

Also, in the commercial hub Lagos, the dollar is changing hands for around 990, according to Umar Salisu, a foreign-exchange operator who compiles the data in Lagos, noted Bloomberg.

This explains in a nutshell that the Nigerian naira extended its slide and hurtled toward the 1000-per-dollar mark in street trading, as the central bank held back from supplying dollars to a panic-stricken market.

Explaining further, Adamu informed tgat “Dollar is so scarce now that as I speak to you, you cannot find $1000 to buy,” Adamu said.

The currency’s parallel-market rate is now about 29% weaker than the official exchange rate, where the naira closed Wednesday at 770.71 per dollar on the FMDQ OTC trading platform. The two rates had briefly converged soon after the country’s newly elected president Bola Tinubu announced sweeping currency reforms in June, but they have diverged steadily since then as dollar supply from the central bank fell short.

The central bank has mostly been on the sidelines this month, according to market players, with one person saying it has barely supplied dollars to the official window. That has helped accelerate the naira’s slide, pushing it down from around 900 per dollar at the start of September.

Meanwhile, companies seeking hard currency to pay for imports have been joined in dollar buying by ordinary citizens who are fearful of further depreciation in the naira.

On Thursday, the central bank postponed a rate-setting meeting scheduled for Sept 25-26. Its new governor, ex-Citigroup executive Olayemi Cardoso, is yet to be confirmed in his role, while the acting governor and four deputy governors have resigned, effectively leaving a policy-making vacuum at the top.

Recall that since June when President Bola Tinubu tingled with the nation’s monetary policy, the naira has headed on a free uncontrolled fall. Tinubu touched on monetary policy and indicated his preference for a low interest rate regime to stimulate economic growth and employment.

Following the policy, the Central Bank of Nigeria announced immediate changes to operations in the Nigerian Foreign Exchange (FX) market, abolishing its hitherto multiple exchange rate windows and collapsed them into the business-based Investors and Exporters (I&E) window.

“All segments are now collapsed into the Investors and Exporters (I&E) window. Applications for medicals, school fees, BTA/PTA, and SMEs would continue to be processed through deposit money banks,” Dr Angela Sere-Ejembi, a director of the bank said in a message to authorised dealers of forex.

FX operators and other market operators had predicted a couple that the naira will hit N1000, going by prevailing circumstances and indices, and today, the prediction has come to pass with no tangible clue that status quo ante as at May 2023 may be maintained.

In his defence, the Minister of Finance, and Coordinating Minister of the Economy, Adebayo Olawale Edun, said that up to $6.8 billion of overdue forward payments in the foreign exchange market was responsible for the slump in the naira and until it is addressed before the local currency can stabilise.

He explained that once unpaid contracts are resolved, it will help the naira become stronger and “pave the way for additional foreign exchange flows.”

While Nigerians await Edun’s prescription to come to pass, they look up the new Governor of the Central Bank of Nigeria, Michael Cardoso in collaboration with Efun to find a path to restoration as the populace groans in the hardship the present situation is unleashing on residents.

Business

Naira Slumps to N1,399/$1 in Official Window, N1,430/$1 in Parallel Market

Published

4 days ago

April 27, 2024

Eric

The Naira continued its slump against the American dollar for the seventh consecutive day on Friday, in both the official and parallel windows.

The domestic currency traded at N1,399.23/$1 and N1,430/$1 respectively.

This is according to data sourced from the Nigerian Autonomous Foreign Exchange Market (NAFEM) window.

At the end of trading on Friday, the Naira lost N89.35 against the dollar when compared to the previous exchange rate of N1,309.88/$1 on Thursday, April 26, 2024.

The intra-day high and low recorded during the day were N1,410/$1 and N1,05/$1 respectively, representing a wide spread of N359/$1.

Similarly, the Naira slumped against the dollar at the parallel section of the market for the seventh consecutive day to trade at N1,430/$1 representing a loss of N10 when compared to the N1,420/$1 it traded the previous day.

However, the Naira gained against the pound. The domestic currency appreciated by N50 against the British Pound to trade at N1,650/£1 as against the previous trading price of N1,700/£1 representing a gain of N50 for the local currency,

The Canadian dollar however closed flat against the Naira to trade at N1,000/CA$1 same as the previous trading day rate.

The Euro also slumped against the Naira to trade at N1,450/€1 as against the rate of N1,500/€1 the previous trading rate indicating a gain of N50 for the Nigerian currency.

Business

Bureau De Change Operators Seek Unified FX Retail Market

Published

4 days ago

April 27, 2024

Eric

The Association of Bureau De Change Operators of Nigeria (ABCON) has announced plans to create a unified structure for the retail end of the country’s foreign exchange market.

The association disclosed on Friday that the move would tackle volatility and boost regulatory compliance within that segment of the market.

This move, according to the ABCON President Aminu Gwadabe, is aimed at tackling currency volatility and strengthening regulatory compliance within the sector.

Gwadabe outlined ABCON’s strategy, which involves unifying operators across various categories within the market. The association is establishing state chapters to achieve better market coordination, integration, and ultimately, a single, standardized market structure. This would, in theory, allow authorities to monitor all BDC operators throughout Nigeria more effectively.

He said: “Part of our vision for a united retail-end forex market includes activating geo-mapping and automated BDCs physical office verification exercise using the Remote Gravity Physical verification apps. This will enable forex buyers to easily locate BDCs offices for effective and seamless transactions.”

He reiterated the benefits of a vibrant retail end of the forex market to support the Central Bank of Nigeria’s goal of achieving true price discovery for the Naira, balancing international obligations and national objectives; ensuring ease of regulation, security agencies monitoring and supervision as well as entrenching market visibility for BDC players.

With the world going digital, BDC operators under the ABCON leadership are committed to staying ahead of the competition by deploying time-tested technology to deliver effective services to foreign exchange end-users.

“Finally, we also condemned in its entity, the seeming reappearance of illegal economic behaviours in forex conversion and peer-to-peer trading that pose another recent surprise in naira volatility and I therefore want to warn that while surprises are the new normal, resilience is also the new skills,” Gwadebe explained.

The benefits of a unified market are multifaceted, according to Gwadabe. It would not only address exchange rate fluctuations but also bolster regulatory compliance among BDCs.

This could have a positive impact on the Central Bank of Nigeria’s (CBN) efforts to achieve transparency in foreign exchange pricing. Additionally, a unified structure could enhance the overall image of BDCs and other stakeholders in the market, potentially leading to increased employment opportunities.

Business

FirstBank Appoints New MD/CEO, Alebiosu

Published

1 week ago

April 22, 2024

Eric

First Bank of Nigeria has appointed Olusegun Alebiosu as its new Managing Director with effect from April 2024.

The Bank stated this in a release signed by its acting company secretary Adewale Arogundade.

Alebiosu takes from Adesola Adeduntan, who resigned abruptly on Saturday with eight months left to complete his tenure in December 2024.

The release stated that “following the resignation of the managing director/CEO of FirstBank, Dr. Adesola Adeduntan, the Board of Directors has appointed Olusegun Alebiosu as the acting CEO of the 130-year-old institution.

“The appointment takes effect immediately and is subject to the approval of the Central Bank of Nigeria.”

The release stated that Alebiosu was until this appointment the executive director, chief risk officer and executive compliance officer since January 2022. Prior to that, he was the Group executive/ chief risk officer, a position he held since 2016.

“Alebiosu brings to the executive management of FirstBank over 28 years’ experience in the banking and financial services industry with cross-functional exposure to Credit risk management, Financial planning and control, Credit and marketing, Trade, Corporate and commercial banking, Agriculture financing, Oil and Gas, Transportation (including Aviation and Shipping) and Project financing.”

It added that the new acting MD/CEO commenced his professional career in 1991 with Oceanic Bank Plc (now EcoBank) and prior to joining FirstBank in 2016 served as Chief Risk Officer at Coronation Merchant Bank Limited, Chief Credit Risk Officer at African Development Bank Group and Group Head, Credit Policy & Deputy Chief Credit Risk Officer at United Bank for Africa Plc.

“He is an alumnus of Harvard School of Government and holds a Bachelor’s degree in Industrial Relations and Personnel Management. He also obtained a Master’s degree in International Law and Diplomacy from the University of Lagos and holds a Master’s degree in Development Studies from the London School of Economics and Political Science.

“He is a member of various professional bodies namely, Fellow, Institute of Chartered Accountants (FCA), Associate, Nigeria Institute of Management (ANIM), Chartered Institute of Bankers of Nigeria (CIBN) and Member, Nigeria Institute of International Affairs.”