Nairametrics
  • Home
  • Exclusives
    • Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Ranking & Reviews
  • Markets
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Content Partners
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Get Data
    • Macro-Economic News
    • Research Analysis
  • General News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
No Result
View All Result
  • Home
  • Exclusives
    • Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Ranking & Reviews
  • Markets
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Content Partners
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Get Data
    • Macro-Economic News
    • Research Analysis
  • General News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
No Result
View All Result
Nairametrics
No Result
View All Result
Home General News

IMF reveals CBN is ‘taking steps’ to float the Naira

Research Team by Research Team
April 29, 2020
in General News, Politics, Spotlight
diaspora remittances, Total credit to the economy rose to N19.54trillion – CBN Governor, CRR debits, P-AADS, #EndSARS: CBN says funds in frozen accounts may be linked to terrorist activities, Covid-19: Court closures impacted revenue generation for courts - Emefiele, P&ID dispute: UK Court orders $200 million guarantee to FG, Leaked letter by Poultry Farmers Association triggered CBN emergency approval to import maize, nImplications of CBN's latest devaluation and FX unification, current account deficit, IMF, COVID-19, CBN OMO ban could give stocks a much-needed boost , CBN’s N132.56 billion T-bills auction records oversubscription by 327% , Nigeria pays $1.09 billion to service external debt in 9 months , Implications of the new CBN stance on treasury bill sale to individuals, Digital technology and blockchain altering conventional banking models - Emefiele  , Increasing food prices might erase chances of CBN cutting interest rate   , Customer complaint against excess/unauthorized charges hits 1, 612 - CBN , CBN moves to reduce cassava derivatives import worth $600 million  , Invest in infrastructural development - CBN Governor admonishes investors , Credit to government declines, as Credit to private sector hits N25.8 trillion, CBN sets N10 billion minimum capital for Mortgage firms, CBN sets N10 billion minimum capital for Mortgage firms , Why you should be worried about the latest drop in external reserves, CBN, Alert: CBN issues N847.4 billion treasury bills for Q1 2020 , PMI: Nigeria’s manufacturing sector gains momentum in November, CBN warns high foreign credits could collapse Nigeria’s economy, predicts high poverty, MPC Member, BVN, Fitch, Foreign excchange (Forex), Overnight rates crash after CBN’s N1.4 trillion deduction, Nigeria’s foreign reserves hit $36.57 billion; Emefiele keeps his word on defending the naira, CBN to support maize farmers, projects 12.5 million metric tons in 18 months, BREAKING: CBN Upscales Greenwich Trust Limited, grants it's operational license for merchant banking, AGSMEIS: CBN expand beneficiaries to 14,638., CBN expands access to mortgage financing

CBN Governor, Godwin Emefiele

Share on FacebookShare on TwitterShare on Linkedin

The International Monetary Fund (IMF) announced it has approved Nigeria’s request for “emergency financial assistance” of $3.4 billion under its Rapid Financing Instrument (RFI). This is the first time in history that Nigeria will be obtaining a loan from the IMF.

Nigeria had approached the IMF over a month ago seeking financial assistance to help the current meet its balance of payment needs. The IMF also recently approved a loan of $ 1billion for Ghana to help fight the Covid-19 virus.

Economic Recession

The Nigerian Economy faces a double whammy from the falling crude oil prices and the Covid-19 pandemic. As a result, most analysts have predicted a slip back into recession and one that could top the 2016 recession that lasted for almost a year. This time, the fall in oil prices has had an immediate impact on government revenues while the COVID-19 pandemic has hit hard on the private sector due to the lockdowns.

The IMF recognizes this risk and has made it clear in some of its recent pronouncements. Earlier in the month, it projected that Nigeria was heading to a recession, its worst recession in three decades, as it expects the nation’s economy to recede by 3.4% in 2020. This realization has led to the approval of the $3.4 billion loans.

In a press release issued by the IMF, it explained that “the near-term economic impact of COVID-19 is expected to be severe, while already high downside risks have increased.  Even before the COVID-19 outbreak, Nigeria’s economy was facing headwinds from rising external vulnerabilities and falling per capita GDP levels. The pandemic—along with the sharp fall in oil prices—has magnified the vulnerabilities, leading to a historic decline in growth and large financing needs” buttressing the urgent need for a loan for Nigeria.

The Deputy Managing Director and Acting Chair of the IMF, Mr. Mitsuhiro Furusawa, also issued the following statement:

“The COVID-19 outbreak—magnified by the sharp fall in international oil prices and reduced global demand for oil products—is severely impacting economic activity in Nigeria. These shocks have created large external and financing needs for 2020. Additional declines in oil prices and more protracted containment measures would seriously affect the real and financial sectors and strain the country’s financing.” 

Financial Assitance with strings

However, what we found more interesting in the comment made by Mr. Farusawa was the inference that Nigeria was taking steps towards floating the currency (flexible exchange rate as they call it) and unifying the exchange rate.

“The authorities’ immediate actions to respond to the crisis are welcome. The short-term focus on fiscal accommodation would allow for higher health spending and help alleviate the impact of the crisis on households and businesses. Steps taken toward a more unified and flexible exchange rate are also important and unification of the exchange rate should be expedited.

This statement appears to confirm that there are moves by the central bank to float the naira and unify the exchange rate across all markets. This move is not a surprise considering that IMF loans typically attract strings such as hard policy reforms such as devaluation, floating currency, and removal of subsidies.

This is perhaps why Nigeria hasn’t obtained loans from the IMF in years allowing multiple governments to continue with economic policies that require less accountability and scrutiny but big on subsidies and capital controls. The institution is known for asking for strings when it comes to the aid of ailing countries.

Nairametrics research understands that the current IMF loan may not have come with strings considering the speed at which it was approved amidst the Covid-19 situation. However, Nigeria may need more than $3.4 billion from the IMF and bond buyers making it inevitable that the currency will be floated.

End of fixed exchange rate?

Recall, the CBN in March devalued (adjusted) the naira from N305/$1 to N360/$1 in the official market where the government converts forex from crude in exchange for Naira from the CBN.

It then moved the rate at which it sells forex in the Bureau De Change to N380/$1 from N360/$1. Since then, transaction volumes have crashed in the IFEX market where forex is traded as investors react to the Covid-19 lock-down.

The black market where the exchange rate is also sold crashed to as high as N460/$1 this week as dollar scarcity persisted in the market.

Related

Tags: Bureau De Change (BDC)Business NewsCBNExchange RateFlexible exchange rateFloating NairaIMFNigerian Business News

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Access Bank
Bankers Committee
Flowmono

Bfpeer
Mega Millions
FCMB
Ikeja Electrics
Zenith CEX
Kwakol Markets
First bank





    Business News | Stock Market | Money Market | Cryptos | Financial Literacy | SME |

    Recent News

    • Fidelity Bank partners Union Systems to optimize trade finance operations
    • AfDB to lend $500 million to women in 2022, to raise $5 billion for women businesses in Africa
    • Konga Food goes live, offers customers free, fastest delivery, other incentives

    Follow us on social media:

    Recent News

    Konga Food goes live, offers customers free, fastest delivery, other incentives

    Konga Food goes live, offers customers free, fastest delivery, other incentives

    May 23, 2022
    Corporate Actions, NSE

    Corporate Actions: These companies have announced dividend payments in May 2022

    May 23, 2022
    • ABOUT US
    • CONTACT US
    • PRODUCTS
    • ANDROID APP
    • iOS APP
    • DISCLAIMER
    • CAREERS
    • PRIVACY POLICY

    © 2022 Nairametrics

    No Result
    View All Result
    • Home
    • Exclusives
      • Analysis
      • Corporate Stories
      • Interviews
      • Investigations
      • Ranking & Reviews
    • Markets
      • Cryptos
      • Commodities
      • Equities
        • Dividends
        • Stock Market
      • Fixed Income
      • Market Views
      • Securities
    • Industries
      • Company News
      • Consumer Goods
      • Content Partners
      • Corporate deals
      • Corporate Press Releases
      • Energy
      • Entertainment
      • Financial Services
      • Hospitality & Travel
      • Manufacturing
      • Real Estate and Construction
      • Tech News
    • Economy
      • Get Data
      • Macro-Economic News
      • Research Analysis
    • General News
    • Financial Literacy
      • Career tips
      • Personal Finance
    • Lifestyle
      • Billionaire Watch
      • Profiles
    • Opinions
      • Blurb
      • Op-Eds

    © 2022 Nairametrics

    Social Media Auto Publish Powered By : XYZScripts.com