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Naira crashes further at the parallel market due to dollar scarcity, lowest since 2017

 The downward slide of the naira in the parallel market appears to be continuing unabated as the slump in crude oil prices

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Naira crashes further at the parallel market due to dollar scarcity, lowest since 2017, Naira drops to N454, foreign investors and importers struggle for dollars

The downward slide of the naira in the parallel market appears not to end anytime soon, as the slump in crude oil prices, and pressure on the foreign exchange market continues.

The local currency dropped to N425 to a dollar, its lowest level in the parallel market since 2017, according to information gotten from Aboki fx.
This indicates a depreciation of about 1.2%, when compared to the N420 per dollar that it sold for on Tuesday, April 21, 2020.

It is also coming against the backdrop of the slump of Bonny light crude price to just over $14 per barrel, and the selling of Brent crude at less than $20 per barrel on Tuesday.

The naira has been hitting new lows in the parallel market and over the counter spots on declining volume, due to low dollar inflow. The naira was quoted at a low of N388.92 to a dollar in the spot market on Tuesday.

(READ MORE: Naira forwards hit record high as local currency crashes to N420/dollar in the parallel…)

The further crash of crude oil prices globally, as a result of low demand and storage issues, has put further pressure on the already strained foreign exchange market.

It was also reported that the naira weakened in the forward market, as the one-year dollar/naira non-deliverable forwards were 498.5 points on Tuesday, as against 492.4 on Monday.

READ ALSO: Questioning Nigeria’s fiscal federalism and resource sharing models

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The increased demand for US dollar is caused by importers with past-due obligations scrambling for hard currency and speculators who are buying to hedge against the future, while providers of foreign exchange, like foreign investors and the ones from foreign remittances, have either exited or declined drastically as a result of the global lockdown.

This is compounded by the suspension of dollar sales to Bureau de Change operators.

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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Business

FG to commence construction of 4 new rail projects across the country

The listed rail line projects include Ibadan-Kano, Port Harcourt-Maiduguri, Kano-Maradi and Lagos-Calabar rail lines.

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Rotimi Amaechi, Minister of Transport, Nigerian railway contract with CCECC and CRRC, China Civil Engineering Construction Corporation, Chinese Railway Rolling stock Corporation

The Minister of Transportation, Rotimi Amaechi, has said that the Federal Government is about to commence 4 new rail line projects in various parts of the country.

The listed rail line projects include Ibadan-Kano, Port Harcourt-Maiduguri, Kano-Maradi and Lagos-Calabar rail lines.

This disclosure was made by Amaechi while speaking at the annual ministerial press briefing on programmes, projects and activities of the Federal Ministry of Transportation and its agencies on Friday in Abuja.

READ: FG to fully launch E-ticketing platform for NRC next week

What the Minister of Transportation is saying

Although the Minister announced that the Federal Government was about to start the rail lines project, he was not specific on the exact dates the projects would start.

Amaechi, in his statement, said, “We have awarded the following contracts and we are about to start and we have even tried to solve the financial problems. This is because we have the problem of having to hire consulting engineers.

READ: $2 billion Kano-Maradi rail would be completed in 36 months – FG

“The ones we are about to start include Ibadan to Kano, we are waiting for funds from China. We are about to start Port Harcourt to Maiduguri, we are waiting for the cabinet to approve consulting shares. We are also to start the Kano-Maradi and Lagos to Calabar.

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“But one thing that is unique about these contracts is that the president early enough directed that all rail lines must stagnate at the seaports.

“That is why there may be a bit of adjustment in the pricing of Kano-Maradi because we have to adjust it to link up to Kano-Lagos so that it can terminate at Lagos seaport.’’

The Minister pointed out that the 185.5km Lagos-Ibadan double standard gauge line with extension to Apapa seaport was nearing completion, while the 186km Abuja-Kaduna and 302km Warri-Itakpe standard gauge lines had been completed and were functional.

READ: FG urges contractors to complete Ebute Meta–Apapa seaports railway extension by January 2021

What this means

  • The various rail line projects are part of the ambitious plan by the Federal Government to create a nationwide rail network that is intended to help in the country’s diversification efforts, away from crude oil.
  • Some of these rail projects will also help to decongest the Apapa ports in Lagos and serve as a route for the import and export of goods in the West African sub-region.

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Business

Customs Tin-Can Island Command generates N112.7 billion in Q1 2021

This is a N21.1 billion increase in revenue compared to a revenue of N91.6 billion in Q1 2020.

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The Nigerian Customs Service revealed that its Tin-Can Island Command has a first-quarter revenue of N112.7 billion in 2021. This is a N21.1 billion increase in revenue compared to a revenue of N91.6 billion in Q1 2020.

This was disclosed by Mr Mba Musa, Customs Area Controller, in a statement on Friday.

“The comparative analysis of quarter one revenue collection from 2018 to 2021 are as follows: in 2018, N76,789,721,107.42; in 2019, N78,857,106,168.27; and in 2020, N91,635,998,490.73,” the customs boss said.

READ: Customs revenue rises by N200 billion to hit N1.5 trillion in 2020

“This improvement is despite the twin threat to lives and livelihood posed by the COVID-19 pandemic. The command has inspired their officers to continue to work hard while observing all the safety measures to achieve the best of performance.

“We kept our lines of communication open and concerted effort was made to ensure that the supply chain is not disrupted,” he added.

READ MORE: Customs officers must declare their assets annually – Customs boss

What you should know: The Nigeria Customs Service (NCS) generated a revenue of N1.5 trillion for the year 2020, a rise compared to N1.3 trillion in 2019.

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