Currencies
Leaked memo: CBN instructs banks to block bank account of 38 companies for “forex abuse”
The CBN did not state why the accounts were flagged but sources inform Nairametrics that it is due to suspicion of forex infractions.
A memo circulating online (see below) indicates the central bank has instructed banks to Post-No-Debit on account of 38 companies.
A Post-No-Debit (PND) is basically an instruction to banks not to allow any withdrawals or transfers from the bank account of account owners, essentially blocking the account from outflows. It is usually drastic a measure taken to allow for investigation and possible to reclaim any illegal inflow into an account.
The CBN did not state why the accounts were flagged but sources inform Nairametrics that it is due to suspicion of forex infractions.
READ: FUGAZ Banks suffer N1.9 trillion in CRR Debits in Q2
The CBN Instruction read as follows;
“You are hereby required to place the under listed accounts on Post-No-Debit with immediate effect and revert with the account names, numbers, currencies and balances of all accounts placed on PND.”
The list includes the accounts of Premier Lotto Ltd a popular lotto company and the owers of the widely used “Baba Ijebu” lotto platform. It also includes several Burea De Change operators, oil and gas firms and several other companies.
CBN barks: On August 26, the Central Bank of Nigeria (CBN) announced it will go tough on exporters who are guilty of forex non-repatriation.
- It also directed banks to submit the names, addresses, and Bank Verification Numbers (BVNs) of all the exporters who have failed to repatriate their export proceeds.
- And warned “necessary ‘action’ would be taken against such defaulters.
- A few days earlier the CBN issued a circular removing buying agents/companies or any third parties from accessing its SMIS forex window through FORM M forex purchases.
- The apex banks instructed that “Authorized Dealers are herby directed to desist from the opening of Form M whose payment is routed through a buying company/agent or any other third parties” effectively eliminating third parties or middlemen from transacting in forex deals in its official SMIS window.”
READ: CBN urges banks to ‘support’ media, aviation industries to avert growing job losses
What they are saying: An article from TheCable suggests one of the Lotto companies on the list transferred $420 million abroad “under the guise of purchasing software” but the funds were later traced to the bank accounts of some of its directors.
- “The forex was sourced from the black market, thereby putting pressure on the exchange rate. The gaming companies are awash with naira which sit in their bank accounts, so they devised a way of moving the funds abroad,” a source told TheCable.
Why this matters: This latest move by the CBN can be viewed in two major ways.
- Firstly it is a message to traders that the central bank has better tools it can use to monitor forex roundtripping and abuse by BDC’s and other forex traders. BVN is a strong tool that gives banks better visibility over forex utilization.
- Secondly, it also demonstrates the CBN could be under immense pressure as actions like this might be construed as a sign of weakness by foreign investors.
READ: Nigeria’s worsening current account deficit piles pressure on exchange rate
Currencies
Naira falls at NAFEX window as Bitcoin rises above $63,000, an all-time record high
Naira depreciated against the US Dollar at the NAFEX window on Tuesday to close at N411/$1.
Tuesday,13th April 2021: The exchange rate between Naira and the US Dollar closed at N411/1$ in the Importers and Exporters window, where forex is traded officially.
Naira depreciated against the US Dollar at the NAFEX window on Tuesday to close at N411/$1. This represents a 0.31% drop when compared to N409.75/$1 recorded on Monday, as the world’s largest cryptocurrency, Bitcoin hits an all-time high rising above $63,000.
Meanwhile, the naira remained stable against the dollar at the parallel market on Tuesday, 13th April 2021 to close at N482 to a dollar, the same rate that was recorded on Monday, April 12, 2021.
READ: Naira gains at NAFEX window despite 26.2% drop in dollar supply
Trading at the official NAFEX window
Naira depreciated against the US Dollar at the Investors and Exporters window on Tuesday to close at N411 to a dollar. This represents a N1.25 drop when compared to N409.75/$1 recorded on Monday, 12th April 2021.
- The opening indicative rate closed at N409.58 to a dollar on Tuesday. This represents a N1.30 gain when compared to N410.88/$1 recorded on Monday.
- Also, an exchange rate of N436.81 to a dollar was the highest rate recorded during intra-day trading before it closed at N411/$1. It also sold for as low as N400/$1 during intra-day trading.
- Forex turnover at the Investor and Exporters (I&E) window rose by 18.04% on Tuesday, 13th April 2021.
- A cursory look at the data tracked by Nairametrics from FMDQ showed that forex turnover increased from $45.35 million recorded on Monday, April 12, 2021, to $53.53 million on Tuesday, April 13, 2021.
READ: Exchange rate weakens as external reserve records first growth in 36 days
Cryptocurrency watch
The world’s most popular digital currency, bitcoin, hit an all-time high above the $63,000 mark, extending its 2021 rally to new heights a day before Coinbase’s share listing in the United States.
- Bitcoin closed at $63, 625.50 with several analysts feeling bullish, with price targets at $70,000 or higher by next month.
- Risks remain, as some analysts choose to wait for confirmation of the breakout in price charts, especially as bullish positioning reaches extreme levels in the futures market.
- The world’s biggest cryptocurrency, which has growing mainstream acceptance as an investment and a means of payment, rose by over 5% on Tuesday. Smaller rival Ethereum also reached a record high of $2,336.75.
- Major firms including BNY Mellon, Mastercard Inc and Tesla Inc are among those to have embraced or invested in cryptocurrencies.
- The digital currency has been widely adopted by many, replacing gold as the global digital-reserve asset.
- Meanwhile, exchange tokens, such as Binance Coin, are seeing their value rise ahead of Coinbase’s public debut as well. Binance Coin, known as BNB, rose 23% on Monday, according to CoinMarketCap.com. Huobi Token and KuCoin Token, among others, also gained.
Oil price gain
Brent crude oil price rose on Tuesday as it closed at $64.08 per barrel, indicating a 1.68% increase compared to $63.02 recorded at the close of trade on Monday on signs of US inventory drawdown.
- Oil extended gains in Asian trading after an industry report pointed to another decline in US crude stockpiles that followed an upbeat assessment of the demand outlook from OPEC.
- The American Petroleum Institute (API) on Tuesday reported a draw in crude oil inventories of 3.608 million barrels for the week ending April 9. Analysts had predicted a draw of 2.889 million barrels for the week.
- OPEC boosted its consumption forecast for this year and predicted the market recovery will continue.
- The latest data from the Energy Information Administration says that while inventories of crude oil are falling, U.S. oil production slipped from 11 million BPD to 10.9 million BPD during the week ending April 2.
- Brent Crude closed at $64.08 (+0.64%), WTI Crude closed at $60.62 indicating 0.73% gain, Bonny Light, $62.56 (+0.58%), OPEC Basket (+0.52%) to close at $61.46 while Natural gas rose by 0.23% to close at $2,625
External reserve
Nigeria’s external reserve gained $102 million on Monday, 12th April 2021 to close at $35.138 billion, being the highest external reserve position recorded in over a month.
- This indicates a 0.29% increase when compared to $35.036 billion recorded on Friday, 9th April 2021.
- It also represents an increase in the country’s external reserve position for the 15th consecutive day, having endured a significant downturn earlier in the year. Nigeria’s reserve has added a total of about $722 million in 15 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.
Currencies
Naira gains at black market as external reserves increases by $620 million in 2 weeks
The opening indicative rate closed at N410.88 to a dollar on Monday.
Monday,12th April 2021: The naira appreciated against the dollar at the parallel market on Monday, 12th April 2021 to close at N482 to a dollar. This represents a N3 gain when compared to the N485/$1 that was recorded on Friday, April 9, 2021.
Meanwhile, the exchange rate between Naira and the US Dollar closed at N409.75/1$ in the Importers and Exporters window, where forex is traded officially.
Naira depreciated against the US Dollar at the NAFEX window on Monday to close at N409.75/$1. This represents a 0.18% drop when compared to N409/$1 recorded on Friday, as the country’s external reserve increased by $620 million in 2 weeks.
READ: Naira strengthens at NAFEX window as bitcoin slumps to $52k
Trading at the official NAFEX window
Naira depreciated against the US Dollar at the Investors and Exporters window on Monday to close at N409.75 to a dollar. This represents a 75 kobo drop when compared to N409/$1 recorded on Friday, 9th April 2021.
- The opening indicative rate closed at N410.88 to a dollar on Monday. This represents a N1.09 drop when compared to N409.79/$1 recorded on Friday.
- Also, an exchange rate of N420 to a dollar was the highest rate recorded during intra-day trading before it closed at N409.75/$1. It also sold for as low as N400/$1 during intra-day trading.
- Forex turnover at the Investor and Exporters (I&E) window dropped by 17.9% on Monday, 12th April 2021.
- A cursory look at the data tracked by Nairametrics from FMDQ showed that forex turnover declined from $55.21 million recorded on Friday, April 9, 2021, to $45.35 million on Monday, April 12, 2021.
READ: Naira appreciates at NAFEX as Nigeria’s external reserve is set to get a boost
Cryptocurrency watch
The world’s most popular digital currency, bitcoin, rose by as much as 2.6% to $61,229 on Monday, nearing an all-time high as bullish sentiment gathered steam ahead of listing by the largest US cryptocurrency exchange.
- The cryptocurrency is up almost nine times in the past year, a return that towers above that of more familiar assets like equities or bullion.
- Against the backdrop of Wall Street’s growing embrace of crypto, the direct listing of digital-token exchange Coinbase Global Inc. is generating a lot of interest.
- Coinbase is moving towards a $100 billion valuation as it is due to go public on the Nasdaq on April 14, the first listing of its kind for a major cryptocurrency company and a test of investor appetite for other start-ups in the sector.
- The digital currency has been widely adopted by many, replacing gold as the global digital-reserve asset.
- Meanwhile, exchange tokens, such as Binance Coin, are seeing their value rise ahead of Coinbase’s public debut as well. Binance Coin, known as BNB, rose 23% on Monday, according to CoinMarketCap.com. Huobi Token and KuCoin Token, among others, also gained.
READ: Best performing mining, industrial and consumer goods stocks from last week
Oil price gain
Brent crude oil price rose on Monday evening as it closed at $63.34 per barrel, indicating a 0.51% increase compared to $63.02 recorded at the close of trade on Sunday on expectations of strong economic recovery.
- Oil prices recorded an increase early on Monday, with WTI Crude topping $60 a barrel for the first time in a week after the Federal Reserve Chairman, Jerome Powell, said that the outlook on the U.S. economy had brightened substantially.
- A weaker U.S. dollar also added to investors’ appetite for crude, while another claim from the Yemeni rebel group, the Houthis that they had targeted oil facilities of Aramco in Saudi Arabia further supported prices.
- Saxo Bank analysts said that the prospect for stronger economic growth helped to offset the impact of a resurgent coronavirus just as OPEC+ prepares to ease production cuts.
- Brent Crude closed at $63.34 (+0.09%), WTI Crude closed at $59.75 indicating 0.08% gain, Bonny Light, $62.20 (+1.06%), OPEC Basket (-0.13%) to close at $61.14 while Natural gas dropped by 0.27% to close at $2.554.
External reserve
Nigeria’s external reserve gained $30 million on Friday, 9th April 2021 to close at $35.036 billion, being the highest external reserve position recorded in over a month.
- This indicates a 0.09% increase when compared to $35.006 billion recorded on Thursday, 8th April 2021.
- It also represents an increase in the country’s external reserve position for the 14th consecutive day, having endured a significant downturn earlier in the year. Nigeria’s reserve has added a total of about $620 million in 14 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.
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