Tag Archives: Devaluation

CBN ‘may devalue in six months’ – Economic Expert

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Lukman Otunuga, a macroeconomics expert and research analyst at FXTM, says the Central Bank of Nigeria (CBN) may devalue the naira to 400 against the dollar on the official side.

In an interview with TheCable, Otunuga said the situation might make the Nigerian currency rise to N600 at the parallel market.

Otunuga, who forecast the devaluation of the naira in 2016, said the apex bank should conserve rising foreign reserves, while letting the naira depreciate to N400 per dollar.

On the nature of Nigeria’s inflation, he said the country is dealing with cost-push inflation.

“In December, it was 18.55 percent. The problem behind this is that we have a situation where producers do not have the ability to get dollars at the official rate,” he said.

“So they use the black market and by using the black market, they push the cost back to consumers.

“This is what is happening, and this is almost very hard for the CBN to tame. So in three to six months, there is a very string possibility of the Central Bank of Nigeria devaluing the naira, yet again, from 305 to probably 350 to 400 to increase liquidity and attract investors.

“In this situation, the best is for the Central Bank of Nigeria (CBN) to hold reserves. The major thing is that they are actually buying, keeping the naira artificially at 305, this has created scarcity. I think it is best to let the reserves grow, and effectively devalue the naira.

“If they do that, it has the ability to pushing the parallel market further to 550 to 600. You have to keep in mind, that the main reason why the parallel market exploded into uncharted territories was because we had recession fears, hike in US rates, and weak oil.”

He said the optimism in the system, with positive forecast from the World Bank and the International Monetary Fund (IMF) about the economy, will minimise the effect of the imminent devaluation.

Otunuga said Nigerians will understand that the intent is to attract foreign direct investment and solve liquidity problems.

Anyaoku Backs Buhari’s Stance On Naira Devaluation

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Chief Emeka Anyaoku, a former Commonwealth Secretary-General on Tuesday in Ibadan endorsed President Muhammadu Buhari’s stand against the devaluation of the naira.

 

Anyaoku spoke at the presentation of Amb. Olusola Sanu’s memoirs “Audacity on the Bound: A Diplomatic Odyssey.”

 

He called on Buhari to maintain his stance and also assemble a team of economic experts on the issue.
Anyaoku, however, stressed the need to take the nation out of its present economic crisis.
He bemoaned the present exploitation of the Nigeria Presidential system by the new generation politicians, whom he blamed for the nation’s woes.

 

“I have worked closely with the old political leaders, who during their time were hardworking, brilliant and known for high level of integrity.

 

“The new generation has exploited the presidential system. The president, governors and local government chairmen now parades over 3,000 special advisers.

“Some of the state governors that cannot boast of strong revenue also have up to 30 advisers.

” A local government chairman now operates presidential system at council level,” he said.
Anyaoku who quoted copiously from the work, described the book as an instructive material for the future generations in Nigeria and for institutional development.

 

He said that Sanu was one of the brightest administrators in Nigeria, who lived a life of hard work and integrity.

Similarly, retired Gen. Yakubu Gowon, a former Head of State commended Sanu for displaying exemplary performances in all the positions he occupied.

Gowon said that the book would help to boost the capacity of young career diplomats.

“I am sure that Sanu will never forget his exploits as an ambassador to Ethiopia,” he said.

 

(NAN).

Mubarak Jarmajo: Naira Devaluation, Naira Rise And A Patriot

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Time has brought us to the moment when the economy isn’t debated by economists alone. We are freely “poke-nosing” into matters that are primarily not ours to debate. Nonetheless, given that this is democracy and the economy cannot be separated from politics, we are all good to stand before the podium.

As I have maintained here and elsewhere in discussions, there is no basis to devalue the Naira given that we hardly export any good or service. The essence of devaluing the currency was to create an enabling environment for foreign investors to come invest thereby creating employment opportunities and thus helping the economy grow. And from the look of things President Buhari is also on the same with yours sincerely.

Now, recently the ABCON has decided to cut the Dollar price buying at about N205 and selling at about N240. This has start yet another debate with our patriot compatriots expressing dismay over what appears to be a welcome development.

Patriotically, Abdullahi A Abdullahi and several others have expressed dissatisfaction over the drop of the Dollar price lamenting that it will not help the economy. They prefer a situation whereby the Dollar will remain high thereby forcing us to look inwards.

While I concur with their stance, I still feel because of the hardship we will continue to suffer, it is good the Dollar comes down as there are several other ways or better still measures through which government can compel us to look inwards.

Either liberally through raising custom duties of imports or forcefully through ban of imports of certain goods and services. In Malaysia for instance, foreign cars are quite expensive that they are hardly afforded because of high custom duty.

As a matter of importance meanwhile, government must begin public enlightenment campaigns in order to reorient our minds and thoughts towards using made in Nigeria goods and services. It also has to show example by for instance making it a policy that henceforth official cars of government should be Innoson automobiles.

Jarmajo is on Twitter: @mukhtarjarmajo

Views expressed are solely that of author and does not represent views of www.omojuwa.com nor its associates

Why I’m Against Naira Devaluation- Buhari

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President Muhammadu Buhari has said that he is yet to be convinced that Nigeria and its people will derive any tangible benefit from an official devaluation of the naira.

Presidential spokesman Femi Adesina quoted Buhari as saying this in Nairobi late Wednesday night at an interactive meeting with Nigerians living in Kenya.

Buhari noted that while export-driven economies could benefit from devaluation of their currencies, devaluation would only lead to further inflation and hardship for the poor and middle classes in Nigeria’s import-dependent economy.

The president maintained that he had no intention of bringing further hardship on the nation’s poor who, according to him,  have already suffered enough

Likening devaluing the Naira to having it “killed”, Buhari said proponents of devaluation would have to work much harder to convince him that ordinary Nigerians would gain anything from it.

Buhari also rejected suggestions that the Central Bank of Nigeria should resume the sale of foreign exchange to Bureaux de Change (BDCs), saying that the Bureau de Change business had become a scam and a drain on the nation’s economy.

“We had just 74 of the bureaux in 2005, now they have grown to about 2,800,” President Buhari was quoted to have noted.

Buhari was also said to have alleged that some bank and government officials used surrogates to run the BDCs and prosper at public expense by obtaining foreign exchange from government at official rates and selling it at much higher rates.

“We will use our foreign exchange for industry, spare parts and the development of needed infrastructure. We don’t have the Dollars to give to the BDCs. Let them go and get it from wherever they can, other than the Central Bank”, Buhari was quoted as telling the gathering.

The president also reaffirmed his conviction that about a third of petroleum subsidy payments under the previous administration was bogus, saying “They just stamped papers and collected our foreign exchange”.

He was said to have appealed to Nigerians studying abroad to bear with his administration as it strived to address the challenges they were facing as a result of new foreign exchange measures.

The president said he was optimistic that the Nigerian economy would stabilize soon with the efficient implementation of measures and policies introduced by his government.

Credit: dailytrust

Naira Faces Fresh Pressure, Falls To 222 Per Dollar

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The naira, which rose to 180 against the dollar shortly after the inauguration of President Muhammadu Buhari about a month ago, has fallen to 222 at the parallel market due to a huge demand for dollars by importers and investors.

Increasing business activities have made importers and investors to move their foreign exchange demands to the parallel market, putting pressure on the naira at the segment, it was learnt on Tuesday.

The dollar was sold for between 220 and 222 on the streets of Lagos, Abuja and Kano on Tuesday, while the pounds and euro were sold for 350 and 249, respectively.

Analysts and foreign exchange dealers said the future of the naira looked bleak, at least at the parallel market.

The Central Bank of Nigeria has been depleting the external reserves in a bid to defend the local currency.

At the interbank forex market, where the central bank intervenes regularly to defend the currency, the naira closed at 199 against the dollar on Tuesday, data from the FMDQ OTC website showed.

The external reserves fell to $29.03bn on June 22, from $29.8bn on May 18, data from the CBN website showed.

Prior to the latest development, the foreign reserves had been stable for several weeks.
Economic and financial analysts said the latest movements in the external reserves meant that the naira was beginning to come under some fresh pressure.

Concerned about the depletion of the reserves, the CBN met with bank officials on Friday to discuss
how to mitigate the pressure on the external reserves.

The CBN has yet to make the outcome of the meeting official but sources said the central bank wanted the banks’ cooperation in order to reduce the pressure on the reserves.

The bank officials, it was learnt, told the CBN that it needed to relax its rules in the forex market and allow the naira to find its level.

The officials, however, promised to take the deliberations at the meeting to the CBN Governor, Mr. Godwin Emefiele.

It is unclear if the CBN will accede to the demand of the banks to relax the rules in the forex market, but the spokesperson for the central bank, Mr. Ibrahim Mu’azu, could not be reached immediately for comments. Calls made to his mobile telephone line were not answered.

Last November, the CBN devalued the naira after spending several billions of dollars to defend the local currency.

The Acting National President, Association of Bureau De Change Operators, Alhaji Aminu Gwadabe, told our correspondent on Tuesday that the naira’s outlook at the parallel market looked bleak, forecasting that the currency might fall to 230 against the dollar in the coming weeks if the central bank failed to deploy measures to curb the increasing dollar demand at the parallel market.

He said, “There is pressure on the naira again. Maturing import bills are making the demand for dollars to rise again. Most importers and investors are saying they could not access dollar at the official market.

“They are now turning to the parallel market, a situation that is now fuelling the demand for dollar and other foreign currencies at the parallel market.”

The Head, Research and Investment, Afrinvest West Africa Limited, a research and investment advisory firm, Mr. Ayodeji Ebo, said, “The CBN needs to do something urgently otherwise it (slide in the value of the naira) will continue.

“If the pressure continues, the CBN may devalue the naira. I think the CBN is also waiting to see the plan of the new government in order to align its monetary policies with it. Once the new government comes up with its plan, the CBN may devalue the naira. If that is done, foreign investors who have been waiting on the sidelines will come in.”

Naira Devaluation: Importers Abandon Cargoes at Ports

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Congestion at the ports is beginning to gather momentum as importers have abandoned their cargoes following the continuous slide of the Naira against the American dollar which currently stands at N250 to $1.

Besides, there has also been a steady increase in number of abandoned containers particularly at the Tin Can Island port.

Stakeholders confirmed to Vanguard that the worsening  exchange rate  situation has prompted the Tin Can Island Customs Command to increase its official transaction rate from N165 to all-time high N199 to a dollar.

Confirming the development, the Customs Area Controller in charge of the Tin Can Island Customs, Mr. Zakari Jibrin said recently that the Auto Policy of the Federal Government and the upcoming 2015 election has caused importers to abandon their cargoes at the port.

Read More: Vanguard

IMF Proposes Devaluation of Naira

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Executive Board of the International Monetary Fund (IMF) has called for the implementation of reforms, including devaluation, to shield the country from risks presented by uncertainties characterizing the economy. The call follows the IMF directors concluding the Article IV consultation1 with Nigeria last week.

According to IMF, during the consultation, executive directors commended the authorities for progress in promoting Nigeria’s economic diversification and for their macroeconomic response to collapsing export prices.  “Directors noted, however, that vulnerabilities remain high in view of the uncertainties about oil price, security, and the political situation, and concurred that additional policy adjustments and broader structural reforms will be necessary in the period ahead to reconstitute buffers, mitigate risks, and meet pressing development needs,” read a statement made available to this publication.

According to the statement, the directors agreed that tightening fiscal policy and allowing the exchange rate to depreciate while using some of the reserve buffer were appropriate responses to the recent fall in oil prices. “Nonetheless, Directors stressed that achieving the authorities’ fiscal targets will require a careful prioritization of public spending and a cautious implementation of capital projects. They also highlighted the importance of improved budgeting at the level of state and local governments to help better manage their fiscal adjustment.”

IMF said directors agreed that mobilizing additional non oil revenues is critical to open up fiscal space and improve public service delivery over the medium term.  They welcomed ongoing initiatives to strengthen tax administration, and encouraged the authorities to also rein in exemptions, keep tax rates under review, persevere with subsidy reform, and improve the management of oil revenue.  “Furthermore, Directors saw merit in reviewing the current revenue sharing arrangements to help address regional disparities over the longer term and ensure that social and development needs are addressed,” read a statement.

IMF said its directors welcomed the recent unification of the foreign exchange rates, noting that greater exchange rate flexibility could help cushion external shocks. “As the largest single supplier of foreign exchange, it will be important for the central bank to intermediate this supply in a transparent, efficient, and fair manner.”

Credit: CAJ News

“Devaluation Has Happened”, Segun Agbaje Confirms

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Central bank of Nigeria has scrapped rDAS market which it conducted bi-weekly following a circular issued. But the bigger news today is that the CBN has now told the dealers that it will be selling dollars at the interbank at N198. The MD of GT Bank and a director of FMDQ Segun Agbaje was quoted as saying “Yes, we will move the band,” Agbaje said. “If demand in RDAS is only 10 percent, really the devaluation has happened.”

This came under new rules released on Wednesday. Under the new rules, banks will only be able to purchase foreign exchange if they have a prior order from a corporate customer, such as a fuel importer or foreign mobile phone company looking to repatriate profits or dividends.

Any outstanding dollar demand at the end of each trading day will be met by the central bank at 198, FMDQ vice chairman Jubril.

Read More: nairametrics.com