Central Bank of Nigeria may further devalue Naira

 

The Central Bank of Nigeria (CBN) may devalue the Naira again if the pressure on the currency continues through the first half of 2015.

According to a Macroeconomic and Banking Sector Themes for 2015 report, by Guaranty Trust Bank (GTB), which states that ''as pressure continues to increase in the first half, we expect that the CBN may consider another devaluation within a range of N175-N180 per USD, as reserves and oil prices continue to fall."

Recall that last year November, the CBN devalued the naira from N150 - N160 to one U.S dollar to N160 - N176, as it struggles to preserve macroeconomic stability. It also increased its benchmark interest rate to a record high of 13 percent from 12 percent. But the conditions that brought about the devaluation still exist and may get worse in the coming months. 

Oil prices have fallen to less than $45 per barrel from over $100 in less than a year, and analysts have predicted a further decline as the oil glut which brought about the price crash has shown no sign of ending soon.

Currencies of several emerging economies were hit by the US Federal Reserve's tapering policy, but currencies of oil-based economies such as the naira and the Russian rouble have been hard hit. "The commencement of normalisation of monetary policy by the U.S. Federal Reserve… has accentuated capital outflows," CBN Governor, Godwin Emefiele said last November. As at January 5, the CBN pegged the country's forex reserve at $34.49 billion, a $20 million gain over December, 2014's $34.47 billion. 

The apex bank says rising internal demand for the dollar had been exerting more pressure on the foreign exchange market. This is expected to continue until after the general elections in February.

When the new CBN governor assumed office last year, he promised to gradually reduce interest rates. "We shall pursue a gradual reduction in interest rates," he had said in his presentation.

However, the forces, that necessitated the devaluation of the Naira also necessitated a hike in interest rate. The CBN thus raised its benchmark interest rate by 100 basis points to 13 percent. GTBank however expects it to further increase it by 50 – 100 basis points.

UPDATE: Naira falls further to N208 to a dollar

 

The naira depreciated against the dollar on Friday, as it traded at N208 from the N191.50 it sold for on Monday, January 19. The new rate has made the naira to lose N16.50 within five days.

However, on the website of the Central Bank of Nigeria (CBN), the naira stood against the dollar at N167.50, while the pound sold for N253.20 and the euro, N193.89S The development has resulted into speculation in the market and caused ripple effects on other currencies.

A NAN correspondent, who visited some Bureau De Change and black market operators in Lagos, observed that they could not give rates to the pound sterling and the euro. Dealers who preferred anonymity said that there was scarcity of dollars in circulation.

 They also alleged that the CBN had stopped selling forex to the Bureaux De Change, since last year. The dealers added that the recent review of trading positions for the forex trading positions of banks to 72 hours, also contributed to speculation in the system.

The effect, they added, was that the naira could depreciate further by next week. In November 2014, the CBN devalued the Naira to N168 to the dollar.

Sambo to Inaugurate Five Ultra-Modern Rail Coaches in Benue Friday

Vice-President Namadi Sambo today in Makurdi, inaugurate five ultra modern 68-seater passenger coaches, delivered to the Nigeria Railway Corporation (NRC) by a Chinese firm.

The NRC's Assistant Director of Public Relations, Mr. Akinwoye Abdulrauf, told the News Agency of Nigeria (NAN) in Makurdi that the inauguration would also signal the beginning of operations of the Makurdi/Port Harcourt intercity passenger service.

Abdulraouf assured that the facilities would be properly serviced and maintained to ease transportation problems in the country.

He said the delivery of the coaches was accompanied by relevant spare parts to avoid intermittent service failure.
He said the Nigerian technical crew, charged with the maintenance of the facilities, was adequately trained to ensure continued service delivery.

Oil majors to preserve dividends despite oil collapse, tap debt

 Europe's oil majors will strike a sober note in their fourth-quarter results and investors will focus on companies' plans to maintain cherished dividends and their strategies to cope with the oil prices collapse that caught many unawares.

Having sold around $120 billion in assets in recent years to boost balance sheets and keep up dividend payouts, companies are expected to increase borrowing and further cut costs as they come to terms with oil prices that have more than halved since June to around $50 a barrel.

For the last quarter of 2014, earnings per share (EPS) for European integrated oil companies, including Royal Dutch Shell , BP, France's Total, Italy's Eni and Spain's Repsol, are expected to fall on average by around 24 percent, according to Barclays analysts.

As investors come to terms with a roughly 20 percent drop in oil companies' shares since last June, according to Reuters data, the focus will turn to how boards plan to adjust to the new environment.

Nigeria naira closes at N190 record low despite central bank support

Nigeria's naira closed at a record closing low of 190.60 to the dollar on Friday, despite the central bank intervening for a fifth day this week to prop up the currency, dealers said.

The naira, which has been hard hit by falling oil prices, fell 1.2 percent against the dollar, from the previous day's close of 188.35 naira.

CBN increases forex trading limits for lenders

 
Nigeria's central bank increased the foreign currency trading position for commercial banks on Thursday to 0.5 percent of their capital base from 0.1 percent, in a move to shore up interbank dollar liquidity.

Liquidity conditions have deteriorated as the naira has slumped to record lows because dollar inflows from foreign investment and other sources have dried up.

The central bank is having to intervene and sell dollars into the market, but that is burning up its foreign reserves.

According to a circular seen by Reuters, the central bank said funds sold to commercial lenders would be used for funding letters of credit, other invisible trades but should not be resold to bureau de change dealers.

The central bank had reduced dealers open positions from 1 percent to zero in a bid to stabilise the currency after it was devalued by 8 percent against the dollar in November.

Last week it allowed banks a 0.1 percent net position but warned them against carry trades or speculative activity.

The naira is at risk of speculative attacks as it is being hit hard by the slump in oil prices and by pressure on emerging market currencies as the dollar strengthens on expectations the United States will soon raise interest rates.

Nigeria Clamps Down on Naira Speculation

Nigeria’s central bank barred foreign-exchange bureaus from buying U.S. dollars through commercial banks, its latest move to contain the damage a collapsing currency and sinking oil prices are doing to Africa’s biggest economy.

Nigeria’s naira currency hit a fresh all-time low beyond 191 to the dollar on Thursday after the bank informed the country’s 2,500 licensed foreign-exchange dealers they could only buy dollars at its own auctions. The bank said the move aimed “to curb speculative demand in the market” or to prevent people from rushing to procure dollars as the naira declines.

But economists and traders said lumping exchange bureaus together with professional currency traders could have the opposite effect. The central bank’s aim is to limit people’s ability to trade naira for dollars while sentiment is against the Nigerian currency; making dollars harder to come by might make them even more desperate to do so, said Salisu Garu, who operates a foreign exchange bureau in the capital, Abuja. “The policy will further devalue the naira,” he said.

Traders have turned against the naira as global oil prices have plummeted, betting that Africa’s top crude producer would struggle to replace the revenue it uses to fund 80% of its budget. The naira has fallen more than 15% over the last six months, tracking a more than 50% decline in the price of oil over the same period.

Nigeria’s central bank has struggled to craft an effective response.

Kenya's raw sugar production expected to rebound in 2015

Kenya’s raw sugar production is expected to rise 4 percent to 617,039 tonnes in 2015, buoyed by extra factory capacity and improved supply of cane, the industry regulator said on Wednesday.

East Africa's biggest economy has an annual sugar deficit of around 200,000 tonnes, which is usually filled by imports from other producers in the region. The country is struggling to improve output due to relatively high production costs and loss-making sugar factories.

The Kenya Sugar Directorate said Kenya produced 591,658 tonnes of sugar in 2014, a 1.4 percent drop from a record harvest of 600,179 tonnes in 2013.

Mumias sugar factory in western Kenya was closed for a period to allow its cane to mature and for maintenance, she said. There was also an unscheduled closure of Kibos sugar factory after its boiler broke down, as well as a scheduled shutdown of West Kenya sugar Company for maintenance, said Mkok.

A fourth miller, Soin Sugar Company was also shut for the entire second-half of 2014 to allow for ongoing factory modernisation, the regulator said, affecting overall performance of the industry.

Ghana to raise public-sector wages 13 pct this year

Ghana will give public-sector workers a 13 percent pay rise this year, the first increase since 2013, when the government froze annual increments as part of its efforts to cut spending, the finance ministry said on Tuesday.

The West African nation, which produces gold, cocoa and oil, is in talks with the International Monetary Fund on an assistance package to fix its fiscal problems, which include a wide budget deficit partly caused by government salaries.

As part of its stabilization plan, the government froze annual wage increases in 2013. Since then, it has paid an annual 10 percent 'cost of living allowance' but left wages flat.

Deputy Finance Minister Cassiel Ato Forson told Reuters the salary increase was agreed after talks with labour unions and will be based on basic pay in 2013. The increase will come into effect this month and employees would not be paid any arrears, he said.

Finance Minister Seth Terkper said last week that a final policy document was be completed for submission to the IMF board for approval and he hopes Ghana could have a program in place in the first quarter of 2015.

Nigeria introduces tighter curbs on currency

Nigerian foreign exchange dealers have agreed to introduce a stricter trading curb in order to stem large fluctuations in the value of the country’s embattled currency.

The naira, which is under pressure from an oil price rout, political turbulence, central bank rules and the Boko Haram insurgency, set a record low of N189.22 per dollar, a fall of 1.5 per cent, before reversing and gaining 1.9 per cent late on Wednesday.

The decision by the Nigerian Financial Markets Dealers Association, initially reported by wire services and confirmed by currency dealers, comes after the nation’s central bank issued rules to stop speculation in the currency that have reduced price liquidity.

The market will now halt trading in the naira once it changes more than 2 per cent during a session.

Nigeria’s central bank, which has limited foreign exchange reserves for defending the currency, has reduced the net open foreign exchange positions banks can hold at the end of each business day to 0.1 per cent of their shareholders’ funds in an attempt to stem currency speculation, a policy seen impairing overall market liquidity.

Mr Gadio said the central bank action had reduced ticket sizes banks can deal in and heightened market volatility.

MTN says to reorganise its South African business unit

 Africa's largest telecoms provider plans to restructure its home market's enterprise business segment, it said on Wednesday, as competition squeezes revenue in its key South African unit.

The Johannesburg-based telecoms giant with operations in 22 nations in Africa and the Middle East said in a statement that it had informed employees who were likely to be affected by the reorganisation at a meeting held on Wednesday.

MTN said the restructuring aims at strengthening its competitive advantage, but did not say how many staff could be affected.

Last year, MTN said it would lay off some of its managers in South Africa where sales have been under pressure following stiff competition from players such as Vodacom and unlisted Cell C.

MTN is also fighting to retain customers in its biggest market Nigeria, where it is facing an onslaught from other players such as India's Bharti Airtel.

SEC DG assures On Vibrant Market

Ag. Director General of the Securities and Exchange Commission (SEC) Mounir Gwarzo has assured Nigerians that the Commission will continue to ensure that the market remains vibrant in order to attract investors both locally and internationally.

Gwarzo gave the assurance when he received members of the Chartered Institute of Stockbrokers (CIS) visited him in the Commission’s headquarters in Abuja. He said the current management will strive to develop domestic investment from retail and institutional investors

Earlier in his remarks, President and Chairman of the Governing Council of the Institute, Mr. Albert Okumagba lamented the over 60 percent control of the Nigerian stock market by foreign investors.

Okumagba said, the current situation were over 60 percent of the market is control by foreign investors give serious cause for concern He said: “The level of participation of our locals is effectively less than 3 million when ideally over 80 million of our people should be in the market.

Nigerian dealers agree to halt trading if naira falls more than 2 pct

Nigerian currency dealers said they agreed in a meeting on Wednesday to halt trading if the naira, hard hit by tumbling oil prices, falls more than 2 percent in a session against the U.S. dollar.

Interbank traders began business about an hour late after discussing how to stabilise the naira and offer more efficient two-way quotes, dealers told Reuters.

The naira firmed 4.3 percent against the greenback to 184, recovering from a record intraday low after the central bank sold dollars to some commercial lenders to support the currency.

Nestle plans to invest $138 million in Egypt in next few years

Swiss food giant Nestle plans to invest about 1 billion Egyptian pounds ($137.93 million) in Egypt in the next few years and believes economic reforms could deliver results, its regional CEO said on Monday.

Political and economic instability triggered by the uprising that toppled autocrat Hosni Mubarak in 2011 have not discouraged Nestle from investing about the same amount in the years since then.

Nestle aims to invest in manufacturing, new products and the nutrition and health industries, he said.

Food is seen as a fast-growing sector in Egypt, the most populous Arab nation with 90 million people.

A flurry of mergers have boosted activity on the Cairo bourse, suggesting growing international interest in the country as the economy starts to pick up again.

Abdel Fattah al-Sisi, who as army chief toppled Islamist president Mohamed Mursi in 2013 and then went on to become elected president, has taken bold steps, such as easing fuel subsidies, that have won praise from foreign investors.

Petroleum marketers defy directive on N87 pump price

Reports say Petroleum marketers in Sokoto and its environs have continued to retain the N97 old pump price of petrol, despite the N87 price per litre announced by the Federal Government on Sunday.

A correspondent who monitored the petroleum supply situation in Sokoto on Monday and Tuesday reported that the commodity was being sold for between N97 and N110 per litre.

The situation was the same at most of the major and independent petroleum marketers’ filling stations.
It was also observed that the NNPC mega stations on Gusau Road, like several others located in the town, were closed.

Ibrahim Musa, a petrol attendant at Mobile filling station, said “we are yet to receive new supplies of the product based on the new pump price’’.

Another attendant at on Gusau Road, also said: “We are ready to adjust to the new price whenever we receive an official confirmation’’.

One of the correspondents on duty said one of the NNPC mega stations on the road sold the product at the old rate of N97 per litre.

All efforts to get comments from the Sokoto Zonal Office of the Department of Petroleum Resources, DPR, proved abortive.

Its Controller, Salihu Moriki, was said to have traveled out of Nigeria for an official assignment.

In the same vein, his deputy, Kaka Sheikh, was on annual leave while the acting Controller was out of the office when a correspondent visited the office on Tuesday.
(NAN)

CBN RETAINS MPR AT 13% TO SUPPORT THE NAIRA

The Central Bank of Nigeria today retained its policy rate at 13 percent, facing a currency at record lows and inflationary risks linked to a collapse in world oil prices.

CBN Governor, Godwin Emefiele gave the bank's Monetary Policy Committee decision, after noting that inflation remained within its targets but faced risks ahead. 

He announced no further moves on the naira's band, which the bank devalued by 8 percent in November in a bid to halt a slide in its reserves. Nigeria's liquidity ratio was retained at 30 percent.

It would be recalled that the apex bank raised interest rates at the last meeting for the first time in two years, in November, by 100 basis points.

Nigeria naira hit record intraday low before CBN MPC Meeting

 

Nigeria's naira hit a record intraday low on Monday ahead of a central bank interest rate meeting, as dollar liquidity dried up on the interbank market, dealers said.

The naira, which has been hit hard by falling oil prices, fell to 188.85 to the dollar at 0930 GMT, weaker than 184.90 it closed at on Friday.

The central bank is due to announce the outcome of its two-day interest rate meeting on Tuesday with most analysts expecting it to maintain tight liquidity to support the currency and hold interest rates at 13 percent.