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Currencies

Controversies trail CBN’s decision to clamp down on foreign money transfers

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The Central Bank of Nigeria has revoked the licenses of all money transfer companies, except three, citing “the greater economic good of Nigeria,” as its reason for embarking on such an action. It further warned that the institution would “not condone any attempt aimed at undermining the country’s foreign exchange regime.” The 3 companies allowed to operate are Western Union, MoneyGram and Ria.

It may be recalled that NairaMetrics brought to your attention that the CBN had lifted its earlier ban on foreign currency deposits, thereby allowing currency transfers. However, this unexpected decision has resulted in immediate criticism due to the immense amount of cash involved.

In 2015 alone, about $20.8 billion was remitted to Nigeria from foreign countries. Furthermore, owners of companies affected by the decision have labelled it as “arbitrary, inexplicable and hugely detrimental to the Nigerian diaspora, who rely on hundreds of money transfer companies and banks, providing them with choice, convenience and competitive pricing.”

The portion of transfers controlled by the still-free-to-operate companies had hitherto been gradually reducing due to the competitive prices provided by these banned money transfer agencies.

Another baffling concern about the sudden decision is the fact that no cogent excuses were given. Rather, the CBN used the vague “greater economic good of Nigeria”. No claims as to how these banned companies were actually detrimental to the economy of the country were made.

The tendency is high that the decision will not seat well with most Nigerians in diaspora, as the most likely result is an oligopoly, where these 3 companies may shoot up the prices for their services, with the full knowledge that there are no other competitors. The charges of MoneyGram for transferring funds to Nigeria was detailed in an earlier post.

Chacha Wabara-Ogbobine is a Legal practitioner with over 9years post call experience. A research Consultant, professional writer and a blogger at heart,owner of four thriving websites with well over 10years of experience.Totally in love with keeping fit and coaching weight loss enthusiasts. I love my quiet time, being with my kids, watching TV series for hours on end.

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    Currencies

    Naira remains stable across forex market as dollar supply improves significantly by 430%

    Naira remained stable against the US Dollar at the NAFEX window on Thursday to close at N410.50/$1.

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    on

    Naira value

    Thursday,15th April 2021: The exchange rate between Naira and the US Dollar closed at N410.50/1$ in the Importers and Exporters window, where forex is traded officially.

    Naira remained stable against the US Dollar at the NAFEX window on Thursday to close at N410.50/$1 as there was no movement when compared to the rate that was recorded on Wednesday, as dollar supply improves significantly by about 430%.

    Also, the naira remained stable against the dollar for the third day at the parallel market on Thursday, 15th April 2021 to close at N482 to a dollar, the same rate that was recorded on Wednesday, April 14, 2021.

    READ: Nigeria’s external reserve drop by $261 million in 15 days, oil firms to sell forex to CBN 

    Trading at the official NAFEX window

    Naira remained stable against the US Dollar at the Investors and Exporters window on Thursday to close at N410.50 to a dollar. This was the same rate that was recorded on Wednesday, 14th April 2021.

    • The opening indicative rate closed at N410.50 to a dollar on Thursday. This represents an 86 kobo drop when compared to N409.64/$1 recorded on Wednesday.
    • Also, an exchange rate of N437.62 to a dollar was the highest rate recorded during intra-day trading before it closed at N410.50/$1. It also sold for as low as N392/$1 during intra-day trading.
    • Forex turnover at the Investor and Exporters (I&E) window rose significantly by 429.93% on Thursday, 15th April 2021.
    • A cursory look at the data tracked by Nairametrics from FMDQ showed that forex turnover increased from $21.92 million recorded on Wednesday, April 14, 2021, to $116.16 million on Thursday, April 15, 2021.

    READ: Naira gains at NAFEX as oil prices record biggest single day loss in 11 months

    Cryptocurrency watch

    The world’s most popular digital currency, Bitcoin, went up by over 1% to close at $63,441 on Thursday evening as most investors still think it is a bubble.

    • Bitcoin had crossed the $64,000 mark on Wednesday after it traded past the $63,000 mark the previous day for the first time.
    • The Co-Founder and Managing Director of Nexo, Antoni Trenchev, had said that Bitcoin could hit $100,000 in the next 12 to 18 months.

    Oil price gain

    Brent crude oil price went up slightly on Thursday to close at $66.83 per barrel, indicating a 0.3% increase compared to $66.63 recorded at the close of trade on Wednesday as it trades at a one-month high.

    Sigma Pensions
    • Oil extended its climb out of a month-long trading range with further signs of an accelerating rebound taking shape in the U.S.
    • Oil remains firmly above its most recent trading range, where it had been stuck near $60 a barrel since mid-March as some regions faced a resurgence in virus cases. Continued signs of a stronger U.S. market are also pushing prices higher.
    • Brent Crude closed at $66.83 (+0.38%), WTI Crude closed at $63.46 indicating 0.49% gain, Bonny Light, $64.79 (+3.56%), OPEC Basket (+2.46%) to close at $63.39 while Natural gas rose by 1.53% to close at $2,658

    READ: Nigeria’s external reserve drop by $261 million in 15 days, oil firms to sell forex to CBN 

    External reserve

    Nigeria’s external reserve gained about $27 million on Wednesday, 14th April 2021 to close at $35.199 billion, being the highest external reserve position recorded in over a month.

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    • This indicates a 0.08% increase when compared to $35.172 billion recorded on Tuesday, 13th April 2021.
    • It also represents an increase in the country’s external reserve position for the 17th consecutive day, having endured a significant downturn earlier in the year. Nigeria’s reserve has added a total of about $783 million in 17 days.
    • This recent increase in Nigeria’s external reserve could however be attributed to the increase in crude oil prices recorded earlier in March before the recent bearish trade in the crude market.
    • It could be attributed to the possible increase in diaspora remittance as the CBN offers incentives for every unit of a dollar received in Nigeria from diaspora remittance.
    • The external reserve is likely to get a further boost, as the Federal Government recently announced plans to issue $500 million Eurobonds for 2021.

    Continue Reading

    Currencies

    Naira appreciates at NAFEX as CBN sells forex to foreign investors, first in 2021

    Naira appreciated against the US Dollar at the NAFEX window on Wednesday to close at N410.50/$1.

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    on

    Wednesday,14th April 2021: The exchange rate between Naira and the US Dollar closed at N410.50/1$ in the Importers and Exporters window, where forex is traded officially.

    Naira appreciated against the US Dollar at the NAFEX window on Wednesday to close at N410.50/$1. This represents a 0.12% gain when compared to N411/$1 recorded on Tuesday, as the Central Bank of Nigeria in its first sale, in 2021, to foreign investors seeking to repatriate their funds abroad, sold $20 million to them according to Reuters.

    Meanwhile, the naira remained stable against the dollar for the second day at the parallel market on Wednesday, 14th April 2021 to close at N482 to a dollar, the same rate that was recorded on Tuesday, April 13, 2021.

    READ: Naira falls at NAFEX window as Bitcoin rises above $63,000, an all-time record high

    Trading at the official NAFEX window

    Naira appreciated against the US Dollar at the Investors and Exporters window on Wednesday to close at N410.50 to a dollar. This represents a 50 kobo gain when compared to N411/$1 recorded on Tuesday, 13th April 2021.

    • The opening indicative rate closed at N409.64 to a dollar on Wednesday. This represents a 6 kobo drop when compared to N409.58/$1 recorded on Tuesday.
    • Also, an exchange rate of N422 to a dollar was the highest rate recorded during intra-day trading before it closed at N409.64/$1. It also sold for as low as N392/$1 during intra-day trading.
    • Forex turnover at the Investor and Exporters (I&E) window dropped significantly by 59.05% on Wednesday, 14th April 2021.
    • A cursory look at the data tracked by Nairametrics from FMDQ showed that forex turnover declined from $53.53 million recorded on Tuesday, April 13, 2021, to $21.92 million on Wednesday, April 14, 2021.

    READ: Naira gains at NAFEX window despite 26.2% drop in dollar supply

    Cryptocurrency watch

    The world’s most popular digital currency, bitcoin, reached another all-time high on Wednesday, touching $64,717.01 before coming down to $62,298.51 as of Wednesday evening ahead of Coinbase’s historic stock market listing in New York.

    • Bitcoin, which has been up and down over the last few weeks, crossed $64,000 on Wednesday after it had just yesterday, crossed the $63,000 mark for the first time.
    • The rally has come in anticipation of cryptocurrency exchange Coinbase’s hotly tipped US stock market listing.
    • Earlier on Wednesday, the price of Dogecoin, recorded a new milestone as it went up by 54%, establishing a new all-time high of $0.1161.
    • Meanwhile, Coinbase, a Cryptocurrency exchange, finally made its highly anticipated debut on Nasdaq on Wednesday, April 14, 2021, becoming the first company devoted entirely to cryptocurrency to enter the US stock exchange with a $100 billion valuation.

    READ: Naira remains flat as external reserve fall to just 6 months of imports

    Sigma Pensions

    Oil price gain

    Brent crude oil price jumped on Wednesday to close at $66.63 per barrel, indicating a 3.98% increase compared to $64.08 recorded at the close of trade on Tuesday as the Energy Information Administration (EIA) reports crude draw.

    • The EIA in its report said that crude oil inventories had shed 5.9 million barrels in the week to April 9, compared with an inventory draw of 3.5 million barrels reported for the previous week.
    • The EIA’s inventory estimate comes a day after the American Petroleum Institute reported a 3.6-million-barrel inventory draw in crude oil for the same period but a 5.565-million-barrel build in gasoline stocks, which prevented oil prices from swinging significantly up or down.
    • The oil rally can also be attributable to the picking up of US oil demand as economic expansion quickens. The West Texas Intermediate (WTI) crude futures surged more than 5% on Wednesday and broke out the narrow trading range they had been stuck in since mid-March.
    • Morgan Stanley, meanwhile, said in a new note that it expected prices to remain range-bound through the end of the summer, at between $65 and $70 per barrel for Brent.
    • Brent Crude closed at $66.63 (+4.65%), WTI Crude closed at $63.18 indicating 4.99% gain, Bonny Light, $62.56 (+0.58%), OPEC Basket (+0.67%) to close at $61.87 while Natural gas declined by 0.08% to close at $2,617

    External reserve

    Nigeria’s external reserve gained about $34 million on Tuesday, 13th April 2021 to close at $35.172 billion, being the highest external reserve position recorded in over a month.

    british airways
    • This indicates a 0.1% increase when compared to $35.138 billion recorded on Monday, 12th April 2021.
    • It also represents an increase in the country’s external reserve position for the 16th consecutive day, having endured a significant downturn earlier in the year. Nigeria’s reserve has added a total of about $756 million in 16 days.
    • This recent increase in Nigeria’s external reserve could however be attributed to the increase in crude oil prices recorded earlier in March before the recent bearish trade in the crude market.
    • It could be attributed to the possible increase in diaspora remittance as the CBN offers incentives for every unit of a dollar received in Nigeria from diaspora remittance.
    • The external reserve is likely to get a further boost, as the Federal Government recently announced plans to issue $500 million Eurobonds for 2021.

    Continue Reading

      





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