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Stock Watch
Naira slides to N748/$ at parallel market Dollar and Naira
By Abubakar Yunus Abuja
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The naira has dropped to N748 per dollar at the parallel section of the foreign exchange (FX) market, popularly called the black or street market.
The figure represents a depreciation of N8 or 1.1 percent from the N740 it traded two weeks ago.
Speaking to TheCable on Wednesday morning, Bureaux De Change (BDC) operators put the buying price of the dollar at N740 and the selling price at N748, leaving an N8 profit margin.
They said there was low demand for the greenback in the street market.
“Demand is not much. Maybe because it’s January. People are not rushing to buy dollars to import goods,” said a BDC operator in Victoria Island, Lagos.
At the official market, the local currency closed flat against the dollar at N461.50/$ on Tuesday, according to details on FMDQ OTC Securities Exchange — a platform that oversees official foreign exchange trading in Nigeria.
The monetary policy committee (MPC) of the Central Bank of Nigeria (CBN) is expected to meet next week to determine the trajectory of the nation’s monetary policy and the economy at large.
Peoples Daily had reported that Godwin Emefiele, CBN governor, resumed duty on Monday after his annual vacation abroad.
“The governor resumed with renewed vigour to perform his duty ahead of the first monetary policy committee (MPC) meeting of the year scheduled for January 23 to 24, 2023,” Osita Nwanisobi, CBN spokesperson, had said.
“Mr. Emefiele remains committed to performing the task before him in line with his oath of office and the policy direction of President Muhammadu Buhari.
“While thanking the public for keeping faith with the bank, we urge Nigerians to continue to support the policies of the bank aimed at ensuring a stable financial system and the Nigerian economy in general.”
By Abubakar Yunus Abuja
The Investments and Securities Bill has been described as a game changer that is capable of enabling the commodities trading ecosystem to thrive thereby diversifying the nation’s economy and provide the nation with foreign exchange.
This was stated by the Managing Director of LFCE, Mr. Akin Akeredolu-Ale while commenting on the ISB which was recently passed by the House of Representatives.
He stated that Nigeria is a commodities country as a better part of the GDP by way of production comes from the commodities ecosystem and urged that Senate to ensure swift concurrence on the Bill.
“We need that concurrence by the Senate as quickly as possible. I am very happy that the NASS has taken it upon themselves as well as the SEC to push this bill. That bill is a game changer for the Commodities Ecosystem, and also a game changer for Nigeria as a commodities country. For now, a lot of commodities being traded is still in the informal sector, the bill would create structure and all the leakages from taxation and revenue will be taken care of by this bill.
“The major things about the commodities ecosystem is the fact that we are looking inwards in Nigeria now. A lot of the impact of the policies that the CBN had done last year by way of supporting the agriculture space are paying off now in the maize, wheat and rice space among others. And for us at the LFCE, we have also looked at the part of commodities that has to do with solid mineral which is the gold space.
“In Nigeria we have over 58 different solid minerals that are sought for all over the world, we have not touched platinum or lithium which is the major component for batteries and electric cars. These are the kinds of commodities that by the time the bill is passed, we would be able to have proper structure and attract foreign investors. What do these foreign investors look out for? The foreign investors look at regulatory framework, legal framework and a proper enabling environment to want to participate in the market”.
He disclosed that in a bid to further deepen the Commodities Trading Ecosystem in Nigeria, the Securities and Exchange Commission (SEC) has approved 13 products for trading on the Lagos Futures and Commodities Exchange.
Akeredolu-Ale stated that the Exchange has capacity to trade electronic receipts of oil and gas, agriculture, solid minerals, derivatives and currencies adding that the Exchange has also put in place necessary infrastructure to trade in derivatives as hedging instruments for investors.
According to him, “On the 28th of July 2022, we launched the Gold Coin. The good thing about the Gold coin is that the gold that was used in its preparation was sourced from Nigeria and a lot of it came from Ilesha. It is being traded and people have realised that this is a very good hedging instrument, this just goes to show the capacity of what we can do in Nigeria if this Bill is passed.
The goal of LCFE is to play a pivotal role in growing the nation’s gross domestic products (GDP) into double digits. In Africa, the commodities ecosystem is the largest employer of labour. It provides a platform to deploy resources into the fungible assets that have been de-risked. We bring transparency through the operations of commodities exchange through our structures and two-way quote”.
He therefore restated the compelling need for the federal government to unlock the potentials of the Nigerian commodity ecosystem through the concurrence of the Investments and Securities Bill by the Senate stating that at the minimum, it will enhance the competitiveness of commodities exchanges in Nigeria.
L-R Group Executive,Transaction Banking Group, first Bank, Mrs Olaitan Martins; Managing Director/ Chief Executive Officer, FirstBank, Dr. Adesola Adeduntan; Ekiti State Governor, Mr Biodun Oyebanji; Executive Director/ Group Chief Risk Officer, FirstBank, Mr. Olusegun Alebiosu ; and Special Assistant/ Business Support Executive Adekunle Amujo,during the First Bank Management Team’s meeting with the Governor in AdoEkiti, yesterday.
FG: Nigeria’s external reserves healthy enough to withstand global recession
By Abubakar Yunus Abuja
The federal government says Nigeria has enough foreign exchange reserves to withstand a global recession this year.
Zainab Ahmed, minister of finance, budget and national planning, disclosed this on Tuesday during an interview with Arise TV on the sidelines of the World Economic Forum (WEF) in Davos.
Citing the projections of multilateral organisations such as the World Bank and the International Monetary Fund, the minister said there was a strong possibility that the world economy is headed for a recession.
“Clearly there is going to be a decline in growth. And why we are having this decline in growth is because of the sustained economic impact of the COVID-19 pandemic,” Ahmed said.
“We’ve seen the resurgence of COVID-19 in some developed economies, especially China, and also the effect of the RussiaUkraine war that is having a global impact.
“The quantitative easing that is being implemented by central banks across the world also contributes to the high cost of interest, resulting in the high inflation rate, and which means people’s spending power is weakened. So, these are all indications that there will be a global recession.”
Ahmed said in 2008 when there was a global recession, Nigeria’s FX reserves were in excess of $60 billion and the country was able to withstand the impact of that recession.
Asked if the country would be able to withstand another recession this year, she said the country’s FX reserves stood at $34 billion.
According to Ahmed, the $34 billion was enough to sustain imports for six months.
“It is true we had higher reserves during the first global recession. Our reserves are now at $34 billion. So, that is still a healthy level. It means we’re able to meet at least six months of imports and other expenses into the country,” the minister explained.
“It means we can withstand another global shock if we’re able to carry through a coordinated response between the monetary, fiscal as well as trade authorities.
“We have learned a lot from the experience that we went through during the COVID. And it showed that when we plan as one, we can actually withstand the shocks.
“You’ll recall that Nigeria’s economy did go into recession during the COVID but it was a short-lived one because of that coordinated response, which had, not just the government, but also the private sector contributing to the effort.”
“Also, at that time we were able to scale back on some categories of government spending to enable us to invest more in the healthcare sector. So, with the right policies we can weather another global recession.”
