Articles

Naira Gains on Moderate Dollar Demand

03 Dec 2012

Views: 1,160

Font Size: a / A

0612N.Naira,-Dollar--notes.jpg - 0612N.Naira,-Dollar--notes.jpg

Naira and Dollar  notes


By Obinna Chima
 
The naira appreciated at both the interbank and parallel market segments of the forex market last week as the Central Bank of Nigeria (CBN) met the dealers’ demand.

The value of the naira against the dollar, monitored by THISDAY in Lagos, showed that save for the Wholesale Dutch Auction System (WDAS), otherwise known as the official market where the local currency dipped slightly, it appreciated at the other two segments.

In fact, at the interbank, the naira jumped by 45 kobo to close at N157.30 to a dollar on Friday, compared to the N157.75 to a dollar it stood the preceding Friday.

Also, at the parallel market, the naira jumped by 50 kobo to close at N159 to a dollar on Friday, from N159.50 to a dollar the preceding Friday.


However, at the WDAS, the naira dropped by one kobo to close as N155.76 to a dollar last Wednesday, over the N155.75 it closed the preceding Wednesday.

In all, the central bank supplied a total of $400 million last week, same amount it offered the preceding week.

Responding to the calls for lower interest rates, he said it would come down at the appropriate time, explaining that the poor performance of companies was not only due to the high interest rates but the challenges posed by infrastructure.

CBN Governor, Mallam Sanusi Lamido Sanusi, last week said that interest rate could not be low in an environment of high inflation.

“Interest rate will come down at the appropriate time .The interest rate (Monetary Policy Rate (MPR)) cannot remain at 12 per cent forever. We are leaving the interest rate at this level because of the inflationary level. Our mandate as CBN is to maintain stability of the system. We cannot have sustainable growth with high inflationary rate,” he said

NIBOR Movement
The Nigerian Interbank Offered Rates (NIBOR) was relatively stable last week as it closed on Friday at an average of 13.20 per cent compared to the 13 per cent it attained the preceding Friday.

Data from the Financial Market Dealers Association (FMDA) showed that while the overnight (call) tenor climbed to 11.71 per cent on Friday, from 10.58 per cent the preceding Friday, the 7-day tenor also climbed to 12.25 per cent on Friday, from 10.96 per cent.


Also, just as the 30-day tenor advanced to 13 per cent on Friday, from 11.79 per cent the preceding Friday, the 60-day tenor improved to 13.50 per cent.
 
Account for Churches, Mosques
The Financial Reporting Council (FRC) last week said it had designed an accounting system for churches, mosques and other not-for-profit organisations, adding that it will compel them to report their financial transactions periodically from January 2013.

Executive Secretary/Chief Executive Officer, FRC, Mr. Jim Osayande Obazee, explained that the move was to ensure that more Nigerians were dragged into the corporate tax net.


This, according to the FRC boss, is also in line with the International Financial Reporting Standards (IFRS).
Obazee said: “We want to release our Statement of Accounting Standards (SAS) 32 because we want churches and charities to begin to present accounts. They just file returns to the Corporate Affairs Commission (CAC) and so long as they pay the N1000, they are home and dry. But we are saying that they must report their financial transactions in proper format.”
 
Merchant Banking
The Director, Corporate Communications, Central Bank of Nigeria (CBN), Mr. Ugochukwu Okoroafor, last week disclosed that in addition to FSDH Securities Limited which had announced that it had gotten a license to operate as a merchant bank, a South African bank –Rand Merchant Bank, had also been granted a merchant banking licence to operate in Nigeria.


This, Okoroafor said, was a huge signal of international interest in the Nigerian market, adding that the bank would commence operations early next year.


He added: “There are several other interests from international in Nigeria. We have also converted the license of FSDH Securities Limited to that of a Merchant Bank. These merchant banks are more like investment banks. They are going to be the ones that would help make projects bankable, like infrastructure. They are also going to assist in ensuring that more companies are taken to the capital market.”
 
The Nigerian Economy
Vice President Namadi Sambo last week said that given the country’s rich economic climate, it had the potential to attract foreign direct (FDI). Sambo made this remark in Amsterdam. He said the transformation agenda of the President Goodluck Jonathan’s administration, which  was anchored on the vision 20:2020, represented government’s commitment to join the league of the world’s top 20 economies by the year 2020.


He also highlighted the achievements of the federal governments in the last 18 months, especially in the power sector.
According to him, with the power reforms, the federal government sought to put an end to years of epileptic power supply being experienced in the country.
 
NEXIM Bank Bill
A bill seeking to amend the Nigeria Export Import Bank (Establishment) Act to compel banks to have more dealings with the National Assembly scaled second reading at the House of Representatives last week. The NEXIM bill seeks to amend Section 16 of the Principal Act to compel the bank to prepare the annual reports of its operations and finances and forward same to the National Assembly.

It also makes provisions for the appointment of a legal practitioner as the board secretary and will also compel the bank to submit through the President its annual budget to the National Assembly.


Chairman, House Committee on Banking and Currency, Hon. Jones Onyereri, who led the debate on the bill said the Act was being further amended to provide for tenure of not more than four years for board members.
Onyereri explained that this was to strengthen the board and bring it in line with the current trends in the industry.
 
Clearing of Legacy Banks’ Instruments
The CBN last week warned deposit money banks (DMBs) to desist from presenting legacy/liquidated banks’ financial instruments for clearing and settlement in various Clearing Houses in the country. The apex bank gave the warning in a circular signed by the Director, Banking and Payment System Department, CBN, Mr. Dipo Fatokun.


The regulator insisted that the development was unacceptable and should be discontinued forthwith.
It explained: “The CBN has noted with concern, the prevalence of legacy/liquidated banks’ financial instruments, being processed and cleared for settlement in the various Clearing Houses. This development is unacceptable and should be discontinued forthwith. The DMBs are advised to stop the issuance and circulation of legacy/liquidated banks’ financial instrument in our clearing system, particularly as we have migrated to NUBAN.”


According to the central bank, with effect from January 2, 2013, no legacy/liquidated bank’s financial instrument would be allowed for presentation in the Nigerian Clearing Houses, adding that “failure to adhere to this important instruction will attract severe sanctions, in line with extant guidelines.”
 
Savannah Bank
In order to enable Savannah Bank of Nigeria (SBN) resume operations, the Nigeria Deposit Insurance Corporation (NDIC) last week disclosed that it has released a total of N1.072 billion of the bank’s fund. The corporation stated this in its 2011 Annual Report and Statement of Accounts, which was made available to journalists Wednesday.


A breakdown of the amount showed that NDIC released N450 million to the bank in 2009 and a balance of N460 million. Similarly, it disclosed that the sum of $1.029 million (N162 million) belonging to the bank was equally released in 2011.
Managing Director/Chief Executive, NDIC, Alhaji Umaru Ibrahim, said recently that the corporation was working with the management of SBN to ensure that the financial institution return to business.


The report also showed that the cumulative recovery of assets of closed banks in liquidation had reached about N22.236 billion in 2011.

Tags: Nigeria, Featured, Business, Naira, Dollar

Comments: 0

Rating: 

 (0)
Add your comment

Please leave your comment below. Your name will appear next to your comment. We'll also keep you updated by email whenever someone else comments on this page. Your comment will appear on this page once it has been approved by a moderator.

comments powered by Disqus