Tag Archives: Devalue

EU Advises Nigeria To Devalue Naira

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A European Union (EU) official, Fillippo Amato, has advised the federal government to devalue the naira as part of measures to tackle the economic recession.

Amato, Counsellor, Head of Trade and Economics Section of EU, made this known in an interview with journalists yesterday. The EU official, according to the News Agency of Nigeria (NAN), said recession could not be addressed with traditional development tools.

He added the recession was a recent development which was due to a number of factors, including the fall in oil prices and resurgence of militancy in the Niger Delta.

“To come out of recession, the country has to take brave decisions, regardless of how unpopular they may be such as fully and effectively devaluing the naira.

“Devaluing the naira is a measure, which will finally reassure investors and attract new capitals to the country.

“At the same time, it will further reduce imports, thereby removing artificial forex restrictions, and removing any potential waste of scarce resources such as the fuel subsidy.

“Improving security (in the North-east and Niger-Delta) and ease of doing business are also key factors on which the government must urgently work to re-launch the economy,’’ he said.

Read More: thisdaylive

Fayose Urges Buhari To Devalue Naira

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Ekiti state Governor, Ayodele Fayose, has urged President Muhammadu Buhari to devalue the na­tion’s currency.
Fayose said: “With the gap between the official rate of N199 and open market rate of over N400 to one dollar, the naira has already been devalued.”
He said President Bu­hari should, therefore, stop deceiving himself and short-changing Nigerians, especially states and lo­cal councils in the country with his forex folicy.”
Governor Fayose, who said there was no time in the history of Nigeria that the gap between dollar of­ficial rate and open market rate was more than N200, pointed out that it made no economic sense for the Federal Government to be calculating the country’s revenue on the basis of the Central Bank of Ni­geria (CBN) official rate of N199 to a dollar, while states and local councils that are sharing the reve­nue with the Federal Gov­ernment run their busi­nesses at the open market rate of over N400 to one dollar, thereby causing business to be folding up by the day and prices of goods skyrocketing every­day.
Special Assistant on Public Communications and New Media to the gov­ernor, Lere Olayinka, in a statement issued in Ado- Ekiti yesterday, quoted the governor as saying apart from breeding corruption through round-tripping or foreign exchange arbi­trage, Nigerians are also being duped and middle class Nigerians, the main people that grow the coun­try’s economy, are being decimated.
He said: “President Bu­hari has travelled to 24 countries in eight months, and will be spending 16 out of the 29 days in Feb­ruary outside the country, with over $500,000 being spent on estacode, while the presidential air fleet, which includes fuelling of the planes and allowances for crew is said to be in the range of $500,000.

Credit: Sun

Nigeria Under Pressure By IMF To Devalue Naira

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The IMF is pressing Nigeria to further devalue its naira currency amid uncertainty over the political and economic outlook for Africa’s biggest oil producer and economy.

Analysts said there’s disappointment that President Muhammadu Buhari’s long-awaited Cabinet list — five months in the making and still not finalized — includes no economic stars to guide much-needed reform.

“There’s no economist on the (Cabinet) list that can suggest to the government ways to improve revenue generation and how to run the economy,” said Garba Kurfi, managing director of APT Securities and Funds.

Credit: AP

Central Bank In No Mood To Devalue Naira

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Nigeria’s central bank is no mood to devalue the naira given the risks to inflation from a weaker currency, its spokesman said on Friday, potentially delaying investment flows into Africa’s biggest economy.

The central bank (CBN) said in a statement it believed the 22 percent depreciation in the naira after it scrapped the official foreign exchange window “is optimal at this time” and the bank would not be pressured into “desperate measures”.

International investors, who think a naira devaluation is long overdue, are holding back from buying Nigerian assets, raising risks of a deeper financing crisis for Africa’s top oil producer and most populous country.

“The CBN believes that the 48 percent decline in oil prices may not be transitory and made bold policy changes including closure of the subsidised official FX window, which resulted in a 22 percent depreciation in the naira,” bank spokesman Ibrahim Muazu said.

“We believe that this adjustment is optimal at this time.”

The central bank scrapped its bi-weekly currency auction in February and pegged the naira near to where it was trading on the interbank market at the time, curbing speculation.

The naira fell steeply on the parallel market after the bank, seeking to conserve its dollar reserves, last week banned importers from sourcing hard currency from the interbank market to buy a wide range of goods.

The naira hit a record weak point of 230 to the dollar on Wednesday while the bank rate was 196.95. Investors have questioned how long the central bank can hold the peg, which it has tweaked slightly four times since February.

CREDIBILITY AT STAKE

“The credibility of the interbank market has been lost at this point,” said Alan Cameron, economist at Exotix.

“The more volumes move to the black market, the harder it will become for the CBN to re-establish the credibility of any official rate. The window for a more modest devaluation is now closing, in our view,” he said.

Stocks, bonds and the currency have been on the ropes since the price of oil plunged last year.

Devaluation worries “will delay any recovery in investment flows … complicate the financing of Nigeria’s fiscal deficit, and potentially delays any economic recovery,” said Razia Khan, chief economist for Africa at Standard Chartered Bank.

Muazu said the central bank’s job was to ensure policy stability: “The CBN does not panic and will not take desperate measures to satisfy a few misguided interests in the market.”

Credit: Reuters

CBN Devalue Naira Again?

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Indications have emerged that the Central Bank of Nigeria may devalue the naira again following developments in the foreign exchange market.

The currency has been experiencing free fall since November 25, 2014 when the CBN Monetary Policy Committee devalued it by eight per cent from 155 to 168 against the United States dollar.

The Bankers’ Committee which comprises the Central Bank of Nigeria governor, the deputy governors, chief executive officers of Deposit Money Banks and other stakeholders gave the hint of further devaluation on Thursday just as the nation’s External Reserves dropped by $1bn in 12 days.

Read More: Punch

Naira Drops as Central Bank Controls Choke Trading

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The naira weakened a second day and Nigerian stocks headed for biggest drop since 2010 as central bank measures to protect the currency of Africa’s largest crude producer from falling oil prices stifled trading.

There were nine trades in the naira between 9 a.m. and 12:30 p.m. in Lagos, compared with 122 in the same period four weeks ago, according to data compiled by Bloomberg from at least 39 local and international banks. The naira weakened 0.8 percent to 185 per dollar, extending losses over the past three months to 11 percent, the most of 24 African currencies tracked by Bloomberg.

The Abuja-based regulator last month told banks to clear foreign exchange positions daily, having previously allowed them net-open positions of 1 percent of shareholder funds. The move has made it difficult for non-Nigerian investors to exit their holdings, according to Samir Gadio, head of African strategy at Standard Chartered Plc.

“For those who remain in Nigeria, it’s become virtually impossible to get out,” he said by phone from London. “There’s a risk that these measures last as long as the central bank feels it doesn’t have the ability to control the exchange rate.”

Calls to the mobile phones of Ibrahim Mu’azu, a spokesman for the central bank, weren’t picked up and he didn’t immediately respond to e-mailed questions. The steps are short-term measures to stabilize the market, he said last month.

Credit: bloomberg.com