Skip to main content

CBN decries speculation as naira plunges, exchanges for 465/$

CBN decries speculation as naira plunges, exchanges for 465/$

 

Declining export receipts from oil and speculative activities of the Bureau De Change operators among other challenges of the COVID-19 pandemic on the economy will put more pressure on the naira.

The Central Bank of Nigeria said this in its report on ‘Monetary, credit, foreign trade and exchange policy guidelines for fiscal years 2020/2021’.

The value of the naira plunged further as it exchanged at 465/$ on the parallel market on Monday, after it exchanged at 460/$ on Thursday.

It had earlier exchange at 430/$ when the CBN commenced forex sales to the BDCs earlier in September.

Sequel to the COVID-19 pandemic, it said, the viability of the external sector in 2020 was expected to deteriorate, given the present worsening current account balance and depletion of external reserves driven, largely, by decelerating export receipts, particularly oil.

Specifically, it added, the degree of external reserves accumulation was expected to decelerate as outflows were expected to outweigh inflows.

As a result, external reserves were expected to lie between $29.9bn and $34.3bn at end-December 2020 (predicated on current declining oil price between $20 and $40).

“This development, in addition to exchange market pressures, emanating from speculative activities in the BDC and I & E segments of foreign exchange market, is expected to exert pressure on the naira exchange rate,” it stated.

In addition, the bank said increased risk aversion behaviour by investors may negatively impact on capital inflow as they flee to safe-haven assets.

Also, it projected that the fiscal space may be limited in 2020, given escalated vulnerability, as a result of sharp decline in oil prices, occasioned by weak global oil demand and price wars between Russia and Saudi Arabia.

This development would undermine the implementation of government’s capital programmes, impede public investment on infrastructural development and could culminate in higher debt profile and attendant debt service obligations of the government.

If the COVID-19 pandemic effects became severe, government may increase fiscal policy responses to ameliorate the impact on the populace, it stated.

The financial sector was expected to remain resilient in 2020 on account of the accommodative monetary policy stance, continued efforts by the bank towards ensuring financial system stability and credit expansion policies.

Furthermore, it added, the renewed policies aimed at enhancing the payments system and cash-less initiative are expected to sustain efficiency, safety and confidence in the Nigerian payments system.

 

 

 

 

Labels:

Comments

Post a Comment

Popular posts from this blog

PRESIDENT BUHARI RECEIVES MADAGASCAN COVID-19 HERBAL “DRUG” FROM GUINEA BISSAU’S PRESIDENT EMBALO

PRESIDENT BUHARI RECEIVES MADAGASCAN COVID-19 HERBAL “DRUG” FROM GUINEA BISSAU’S PRESIDENT EMBALO President Muhammadu Buhari Saturday at the State House, Abuja, received the Madagascan native formulation against the Covid-19 pandemic, and reiterated that he will listen to science before allowing traditional or any new medicines to be administered on Nigerians. At an audience meeting with President Umaro Sissoco Embalo of Guinea Bissau who brought along with him the samples of the traditional medicine as shared to African nations by Madagascar, President Buhari said his position on all such herbal or traditional medicinal postulates had remained the same. “We have our institutions, systems and processes in the country. Any such formulations should be sent to them for verification. I will not put it to use without the endorsement of our institutions,” said the Nigerian President. On the main reason for his visit, President Embalo said having stabilized his country after the tus...
Post a Comment
Read more

Local investors take charge as foreign investors remain cautious amid FX scarcity

Local investors take charge as foreign investors remain cautious amid FX scarcity Renewed positive sentiments in the global space dominated markets in the month of May as investors’ optimism for a speedy economic recovery continues to support appetite for risky assets. This is also coming on the heels of ease in lockdown and gradual reopening of economic activities. In Nigeria, domestic investors took the driving seat at the nation’s equities market in the month of May as they took positions in cheap and dividend-paying bellwether stocks. On the other hand, foreign investors who are unable to move their funds from the country due to FX scarcity rolled their money back into the equities market. In the month of May, total value of transactions executed by domestic Investors out performed transactions executed by Foreign Investors by 40percent. According to data released by the Nigeria Stock Exchange, total transactions executed between May and April revealed that total domest...
Post a Comment
Read more

Nigeria’s second-largest cement maker eyes new mega plant

Nigeria’s second-largest cement maker eyes new mega plant Nigeria’s BUA Cement plans to set up a mega plant in the Northeastern Adamawa State in furtherance of the company’s business expansion program, Chairman Abdulsamad Rabiu has said. The 3 million metric tonnes cement plant will be located in Guyuk and Lamurde local governments of the state, as preliminary findings show that the LGAs are reputed to have a good quality of limestone deposits, Rabiu said during a courtesy visit to the Adamawa State Governor, Ahmadu Umaru Fintiri in the Government House, Yola. The Guyuk Cement Plant will be accompanied by a 50 megawatts power plant to supply power to the proposed cement plant and communities of Guyuk and Lamurde in addition to providing 3,000 direct and 5,000 indirect jobs, according to the Chairman.\ The planned investment in Adamawa will be BUA’s major investment in North-East Nigeria and its strategy of sourcing raw materials locally – the majority of the firm’...
Post a Comment
Read more