Naira hits low of 251/$ on unofficial market, dollar reserves fall

Nigeria's naira fell 2 percent to a low of 251 to the dollar on the unofficial market on Wednesday as the central bank reduced dollar supplies to bureaux de change operators due to incomplete documentation, traders said.

The bank sold $30.5 million to 1,017 bureaux de change agents, excluding around 1,801 others from its weekly sale. Wednesday's sale was lower from the $84.5 million it offered two weeks ago.

On the official interbank market, the naira traded at 199.47 at 1139 GMT, close to a rate at which it has been pegged since February.

Meanwhile the nation's reserves shed 1.1 percent in a week to $29.59 billion as of Dec. 7, according to data today from the Central bank of Nigeria.

AMCON battles economic difficulties to repay N5.6trn bond obligations

THE Assets Management Company of Nigeria (AMCON) is battling with the challenges of economic difficulties including decline in crude oil prices in its efforts to repay N5.6 trillion bond obligations to banks.

Managing Director and Chief Executive, AMCON, Ahmed Kuru disclosed this at an interactive session with journalists in Lagos yesterday.

He said that AMCON is expected to pay up N5.6 trillion of the funds raised through bond issuance over the next 10 years but it is finding it difficult to get enough money to pay up.

He explained that banks which contribute 70 per cent of the AMCON sinking fund is growing at about 12 per cent which is less than the 20 per cent projected growth.

Banks are contributing 0.5 per cent of their balance sheet into the AMCON sinking fund but Kuru says that the contribution of banks to the sinking fund is going to fall short of expectations this year.

The bad bank he explained is also faced with the challenges created by the dwindling oil price. According to him, the low price of crude oil at the international market is affecting its ability to sell off some of its assets and pay up on its obligations.

Kuru explained that decline in price of crude in the international market has affected the valuation of some of the assets which it is holding. With over 30 per cent of its assets being in the oil and gas sector, he said “we all know what is happening to the price of crude, what it does is that it affects the price of the assets that we are holding.”

Nigeria stocks hit 3-year low as oil prices tumble

 

Nigerian stocks shed 2.4 percent to hit a new three-year low on Wednesday after global oil prices tumbled to their lowest in more than six years.

The stock market, which has the second-biggest weighting after Kuwait on the MSCI frontier market index, fell for the second day on thin volumes to levels not seen since December 2012.

The bourse, which is down 20.6 percent year-to-date, broke below the psychologically key 27,000 point line on Wednesday. Banking shares fell the most, down 3.1 percent as investors sold off relatively liquid financial stocks.

On Tuesday, Brent crude touched its lowest levels since February 2009. Oil plunged after OPEC last week failed to agree a cut in production quotas in the face of slumping prices and a mounting global supply glut. Brent traded at $40.68 on Wednesday.

Nigeria, which relies on oil exports for 70 percent of government revenue, faces its worst economic crisis in years brought on by the sharp fall in crude prices.

Nigeria's cabinet on Monday agreed a 6 trillion naira budget proposal for 2016, up by 1.5 trillion naira on last year despite low oil prices that have hammered Africa's biggest economy.

Budget and Planning Minister Udoma Udo Udoma said the cabinet was assuming a conservative oil price of $38 a barrel and oil production at 2.2 million barrels per day. Lawmakers passed the 2015 budget at $53 a barrel in April.

SEC insists BGL Suspension still subsists

The Securities and Exchange Commission (SEC) has insisted that the suspension of BGL Plc, its subsidiaries and sponsored individuals from all capital market activities still subsists, following the publication of the BGL 50 Index in a national daily.

SEC in a notice it posted on its official website, said that the Commission dissociates itself from the “BGL 50 Index” publication.

I would be recalled that SEC in May 2015 announced the suspension of BGL Group Plc from all capital market operations, ordering that Mr. Albert Okumagba,  who is the Group Managing Director of BGL Group, should cease to be a registered Sponsored Individual with the commission following the withdrawal of the registration of BGL Plc as a  capital market operator.

The commission however further assured that it is committed to protect investors and the Nigeria capital market.

Govt proposes N6tr budget for 2016

Following its second meeting since it was constituted, the Federal Executive Council (FEC) yesterday announced an approval of an estimated budget of N 6 trillion for the 2016 fiscal year, which is about N1 trillion more than the 2015 budget.

The council also said it was working on a $38 crude oil price benchmark as well as a 2.2 million barrels a day oil production.

Briefing State House correspondents after the meeting which lasted more than three hours, the Budget and National Planning Minister, Udoma Udo Udoma, said the capital expenditure would take priority over recurrent vote in the new administration’s change agenda, noting that the government was projecting 30 percent capital expenditure as against the current 15 percent.

Flanked by the Minister of State in the ministry, Mrs. Zainab Ahmed and his Information and Culture counterpart, Alhaji Lai Mohammed, Udoma said the Federal Government was working very hard towards getting the Petroleum Industry Bill (PIB) passed
“Today, Council approved the Medium Term Economic Framework, which sets out the policies of government over the next years, it sets out the fundamental economic underpinning of the budget.

“The highlights are as follows: we project and we are working with $38 crude oil price, we consider that to be very conservative but because of the uncertainty, we felt that we should start with a conservative crude oil price.

“We are also working with 2.2 million barrels a day production, it is achievable, particularly because with the passage of the Petroleum Industry Bill (PIB) which we are working to achieve, we believe that, that is a modest figure that we should be able to produce something higher than that.

“And so next year, we are looking at an expansionist budget, we are looking at a budget that will be N1 trillion more than last year, so we are looking at a budget of about N6 trillion. Last year’s budget, including the supplementary was about N 5 trillion, so we are looking at a N 6 trillion budget.”

He disclosed that all the increases would be spent on capital expenditure , because of infrastructure issues that  the country has  to address.

On funding of the budget, Udoma said the government would get funds from two sources . First , by increasing non-oil revenue and getting more we are looking at trying to get more money from government agencies.

The government will also look at keeping down recurrent budget, which means we are looking at savings that we can make from overheads.

Banks to sell foreign currencies to travellers

There are reports that deposit Money Banks in the country are set to commence the sale of foreign currencies as Personal Travel Allowance and Business Travel Allowance to end-users.

This follows major falls in the naira-dollar exchange rate at the parallel market from 241 to 251 in the past seven days.

Banking sources said the Central Bank of Nigeria and the chief executive officers of the commercial banks had commenced talks to ensure that the DMBs begin the sale of forex in form of the PTA and BTA to members of the public as early as next week.

The CBN had last Wednesday denied over 1,600 Bureaux De Change operators access to the $30,000 limit weekly forex sale after they failed to render returns on the utilisation of previous forex purchased from the CBN window.

The development led to scarcity of forex in international airports across the country, forcing the naira to depreciate against the dollar at the parallel market from between 241 and 243 to 251.

However, the latest move by the CBN in collaboration with the commercial banks is expected to lead to huge supply of dollars to end-users, particularly travellers in the market.

The development is expected to reduce the pressure on the naira occasioned by the scarcity of dollars at the parallel market.

The discussions between the CBN and the banks over the commencement of forex sales is expected to be finalised at a meeting slated for this weekend, according to top baking sources privy to the discussions.

It was also gathered that the central bank had put measures in place to ensure that licensed forex dealers at the airport, particularly Travelex, sell forex to intending travellers.

The Director, Corporate Communications, CBN, Mr. Ibrahim Mu’azu, said the banks were selling forex to legitimate end-users, adding that the central bank had put in place measures that would ensure that “all legitimate needs are met.”

Naira trades 250 to the dollar at parallel Market

The Nigerian Naira traded at 250 naira on the unofficial market today, just up from Friday's low of 251, as dollar shortages hit bureaux de change operators.

Traders said nearly half of 2,818 bureaux de change operators were denied access to the central bank's dollar sale last week because of incomplete documentation, weakening the naira.

At the inter-bank market, the naira traded at 198.90 to the dollar, around a rate it has been pegged to since February.

Traders expect dollar allocation to BDC agents to increase on Wednesday as companies update their records with the central bank.