The Central Bank of Nigeria’s (CBN’s) fourth quarter economic report has revealed that about $39.9 billion was injected into the foreign exchange market to defend the Naira between January and December 2018.
The CBN makes regular dollar injections into the foreign exchange market which helps the apex bank achieve long-term naira stability and curb volatility in the forex market. The CBN usually injects liquidity about three times a week.
The intervention is provided to authorise dealers in the wholesale segment of the market, as well as other sectors of the economy such as agriculture, manufacturing and Small and Medium Enterprises segment.
Customers that required foreign exchange for invisibles such as tuition fees, medical payments and Basic Travel Allowance, among others, are also allocated funds from the intervention.
The report read in part, “A total of $9.18bn was sold by the CBN to authorised dealers in the fourth quarter of 2018.
“This represents 16.1 per cent decline below the level in the third quarter of 2018, but was 80.6 per cent above the level in the corresponding period of 2017.
“The development, relative to the preceding quarter, reflected the decline in interbank sales and swaps transactions in the review quarter.
“Of the total, foreign exchange forwards disbursed at maturity was $3.15bn (34.3 per cent); sales to BDCs, $2.98bn (32.5 per cent); investors’ and exporters’ window, $2.09bn (22.8 per cent); interbank sales, $820m (8.7 per cent); and swaps transactions, $0.13bn (1.5 per cent).
“However, the average exchange rate of the naira vis-à-vis the United States dollar at the interbank segment depreciated by 0.2 per cent to N306.70/US$, relative to the level at end-September 2018.
“Similarly, at the BDC segment, the average exchange rate, depreciated by 0.9 per cent and 0.01 per cent below the levels in the preceding quarter and the corresponding period of 2017 to N362.42/$.
“At the investors’ and exporters’ window segment, the average exchange rate stood at N364.27/$, representing 0.5 per cent and one per cent depreciation relative to the levels in the preceding quarter and the corresponding period of 2017, respectively.
“Consequently, the premium between the average interbank and BDC rates widened by 0.8 percentage points in the review quarter, from 18.2 percentage points at the end of the fourth quarter of 2018, but the spread between the average exchange rates at the investors’ and exporters’ window and the BDC segment narrowed further to 0.5 per cent from 0.9 per cent at the end of the preceding quarter.”
An analysis of the report showed that foreign exchange inflow into the economy increased by 2.8 per cent to $27.64bn as of the end of December last year.
The increase in foreign exchange inflow was as a result of the 12.3 per cent increase in inflow through the CBN.
Oil sector receipts, which accounted for $3.02bn, showed a decrease of 14.5 per cent below the level at the end of the preceding quarter.
The report stated that with $11.49bn as of December 31 last year, non-public sector inflow rose by 22.5 per cent above the third quarter levels.
A further analysis of the report showed that autonomous inflow of foreign exchange was put at $13.13bn, which fell 6.1 per cent below the levels at the end of the preceding quarter.
The Central Bank of Nigeria (CBN) has injected another $210 million into the foreign exchange market in continuation of its intervention in the Inter-Bank Foreign Exchange Market.
According to the CBN Director, Corporate Communications, Mr Isaac Okoroafor, in a statement in Abuja on Tuesday, the apex bank offered $100m as wholesale interventions and allocated $55m to Small and Medium Enterprises, while another $55m was allocated to customers requiring foreign exchange for business and personal travels, tuition or medical fees.
Imitators further explained that Tuesday’s interventions were in continuation of the bank’s resolve to sustain the high level of stability in the foreign exchange market and also to continue to ease access to the currency by customers in different sectors.
Okoroafor said the CBN was optimistic that the Naira would sustain its run against the dollar and other major currencies around the world, considering the level of transparency in the market.
The fourth quarter 2018 report just released by the Central Bank of Nigeria, CBN, has shown that currency in circulation as at the end of December, 2818 rose 20.9 percent to stand at N2.32 trillion ($6.4 Billion).
According to the CBN report, the development relative to the preceding quarter reflected mainly 19.4 per cent and 7.5 per cent increase in its currency outside banks and demand deposit components respectively.
Also, the report puts the total deposits at the CBN at N15.7tn at the end of December 2018, indicating a 6.5 per cent increase above the level at the end of September 2018.
The increase, the CBN said is attributable to 13.0 per cent and 9.5 per cent rise in the other deposits of the private sector and the Federal Government respectively.
Of the total deposits at the CBN, the shares of the Federal Government, banks and private sector deposits were 49.6 per cent, 30.6 per cent and 19.8 per cent respectively.
Furthermore, the report showed that reserve money rose by 4.9 per cent to N7.135tn at the end of December 2018, compared with the increase of 7.0 per cent at the end of September 2018. The development reflected the increase in total bank reserves.
On money market development, the CBN disclosed that it was generally stable in the fourth quarter of 2018, as liquidity was buoyed by inflow from fiscal injections, Federal Government bonds, Nigerian treasury bills and maturing CBN bills, while outflow, such as the sale of CBN bills, FGN securities and provisioning and settlement for foreign exchange purchases, impacted on market liquidity.
Overall, the report indicated that banks continued to access the intra- day and standing facilities window to meet their short-term liquidity needs during the review quarter, while showing that total value of money market assets outstanding at the end of the fourth quarter of 2018 was N11.897tn, showing an increase of 0.4 per cent, compared with 1.4 per cent increase, at the end of the third quarter of 2018.
The increase, the report said was as a result of the 12.5 per cent and 1.5 per cent increase in bankers’ acceptances and FGN bonds outstanding, respectively, during the quarter under review.
A Federal High Court sitting in Lagos, Southwest Nigeria has adjourned for further hearing of the N6,441,369,617.73 suit instituted against Zenith Bank Plc, by a Lagos businessman, Olusola Adejugbe and his company Tonique Oil Services limited over alleged excess and illegal charges.
By a further amended statement of claim accompanied by written statement on Oath sworn to by Adejugbe and filed before the court by Lanre Ogunlesi SAN, the businessman averred that in the course of his business engagements, his company Tonique Oil Services Limited obtained several credit facilities from Zenith Bank PLC while he pledged three of his properties as securities for the loan facilities.
The plaintiffs averred that three different transactions leading to this litigation occurred in the company’s current account whereby excess interest and charges were discovered. The company demanded for a reversal but the bank refused.
A forensic accounting firm was commissioned to scrutinize and analyse the Company’s account. It was then discovered that between August 2006 and December 2013, excess interest and charges on the Company’s account by Zenith Bank Plc amounted to N1,842,471,801.99.
By a letter dated 19th February 2008, the bank granted Tonique Oil Services Company commercial paper facility of N2,568,644,276.09 to finance the purchase of 30,000MT of Petroleum products, but N2,501,270,000 was credited into the account of the company.
However, it was alleged further that instead of Zenith Bank financing the purchase of 30,000 metric tons of Petroleum products for the company as per letter of offer, the entire sum of N2,501,270,000 was diverted by the bank for the purchase of its own shares during the bank’s initial public offer, a conduct that is unethical, unprofessional and reprehensive.
In addition, out of the sum of N104,363,212.03 assessed as dividends payable on the bank’s shares only N42,173,498.43 was credited into the company’s account leaving outstanding balance of N62,169,713.60.
The bank’s shares purportedly bought by the Tonique Oil Company with the facilities granted by Zenith bank were managed by the bank so much that the bank eventually liquidated the shares after the value has nose-dived and depreciated.
Another activity on the Tonique Oil Company current account with the bank was the sale and purchase of a property in Port Harcourt that belonged to one of the shareholders /customers of the bank who needed to clean up some of his obligations to the bank. It was the bank who introduce Tonique Oil company to the shareholders 50,000 square meters of land out of which the company bought 20,000 square metres for the purpose of expanding its business earnings.
To facilitate the purchase of the land, the bank offered the company a term loan of N500,000 and it was part of understanding of the company and the bank that after the purchase of the land, the bank will finance the company’s Tank forms to be built thereon.
After the purchase of the land, the bank took possession of the title documents of the land as collateral but reneged on the promise and understanding to finance the Company’s tank farm on the land and since 2008 the land had been under the management of the bank and the same had been lying fallow.
In this circumstance, the plaintiffs contended that Tonique Oil Company was not indebted to the bank and any alleged indebtedness could only have been arisen as a result of the unconscionable and illegal acts of the bank’s officials in debiting the company’s account with astronomical spurious interest charged, consequently the plaintiffs also contended that such interest charges are illegal in that they contravene the Central Bank of Nigeria Monetary Credit and Foreign Exchange/Trade guidelines.
The plaintiffs financial consultant computed other charges that were passed into the account of the company, base on relevant policy circulars, guide to bank charges of Central bank of Nigeria and discovered that the bank excessively overcharged the company on interest on overdraft, COT, and VAT on COT, Management Fees, upcountry transfer fees, interest on commercial paper, foreign exchange purchases and letter of credits.
Consequently, the plaintiffs are contending that they are not indebted to the bank rather the bank has overcharged the plaintiffs to several billions of Naira.
The plaintiffs are urging the court to declare that Zenith Bank being a bank within the supervisions and control of CBN cannot charge interest on any facilities granted to them beyond the official approved policy rate of the Central bank of Nigeria.
The plaintiffs are also urging the court not only to restrain the bank from selling their property pledged as securities for the loan but to also compel Zenith Bank to pay Tonique Oil services company the sum of ₦6,441,369,617.73 being the total excess charges debited into the company’s account by the bank and interest on the same amount at the rate of 21% per annum from the date of judgement of the court until final liquidation.
However, by its further statement of defence accompanied with statement on oath sworn to by Senior Assistant Manager, Internal Control and Audit Department of Zenith bank, Vincent Ohanugo and filed before the court, the bank denied almost all the company’s claim and stated that the company was granted the following loans: ₦2.5 billion regular commercial paper , $36 million united state Dollars import finance facility, $6,648,000 commercial paper /usance facility $9 million Dollars import finance facility via usance facility $11 million Dollars short term import facility of ₦500 million.
The Central Bank of Nigeria, CBN, has said that the Federal Government recorded fiscal deficit of N910.41 billion in the fourth quarter of 2018.
The CBN stated this in its latest economic report.
It said: “Federally-collected revenue, at N2.41tn, in the fourth quarter of 2018, was 27.4 per cent and 4.8 per cent lower than the estimate and the receipts in the preceding quarter, respectively.
“The development relative to budget estimate was due to the shortfall in receipts from both oil and non-oil revenue in the reviewed quarter. Federal Government estimated retained revenue and total expenditures were N916.44bn and N1.826tn, respectively, resulting in an estimated deficit of N910.41bn in the fourth quarter of 2018.”
According to the report, the cessation of rainfall in the period led to widespread dryness across the country.
The report also said that agricultural activities in the fourth quarter were dominated by harvesting of tubers, grains and vegetables.
“In the livestock sub-sector, farmers continued with the breeding of poultry birds and fattening of cattle in anticipation of the end of year sales,” the CBN said.
It said the end-period headline inflation on year-on-year and 12-month moving average bases for the review period were 11.44 per cent and 12.10 per cent, respectively.
The apex bank maintained a non-expansionary monetary policy stance in the fourth quarter of 2018, aimed at further curbing inflationary pressure.
Broad money supply (M3), on a quarter-on-quarter basis, grew by 8.3 per cent to N33.42tn at end-December 2018, compared with the growth of 5.1 per cent at end-September 2018.
The development, the report said reflected, wholly, the 4.5 per cent increase in domestic credit (net) of the banking system, adding that broad money supply grew by 16.6 per cent, compared with the 7.6 per cent and 0.6 per cent growth recorded at the end of the preceding quarter of 2018 and the corresponding quarter of 2017, respectively.
The report also indicated that growth in M3 was due to the 6.4 per cent and 18.5 per cent increase in domestic credit (net) and foreign assets (net) of the banking system, respectively.
On a quarter-on-quarter basis, narrow money supply (M1), rose by 9.2 per cent, compared with 0.5 per cent and 11.0 per cent at the end of the preceding quarter, due largely to the 19.4 per cent and 7.5 increase in its currency outside banks and demand deposit components, respectively.
Developments in banks’ deposit rates were mixed, while lending rates trended downwards in the review quarter.
With the exception of the one-month and three-month deposit rates which fell by 0.26 and 0.04 percentage point to 8.79 per cent and 9.43 per cent, respectively, all other deposit rates of various maturities rose from a range of 3.68 – 10.10 per cent to 3.86 – 10.52 per cent at end-December 2018.
The CBN report further stated that average savings rate remained unchanged at 4.07 per cent, same as at the end of the third quarter of 2018, while the average term deposit rate rose by 0.12 percentage points to 8.63 per cent at end of the review quarter.
The Central Bank of Nigeria, CBN, on Monday said there is no truth in a report alleging that faceless agents, backed by regulators, were exploiting the nation’s multiple exchange rates.
According to the report, the activities of the faceless agents which have devastating effects on the forex market, gives the agents about N32 billion annually.
The CBN, in a statement on Monday, said: “The forex rates across various markets governed and regulated by the CBN, have been converging, leaving no room for arbitrage opportunities in Nigeria’s forex market.
“For avoidance of doubt, the CBN will continue to act in the best interest of Nigeria and shall ensure it remains focused on its core mandate of sustaining the stability in the forex market.”
The Central Bank of Nigeria (CBN) on Monday denied involvement in foreign exchange manipulation as alleged in one of the national dailies.
The bank’s Director, Corporate Communications of the CBN, Mr Issac Okorafor made the denial on its Website.
The regulator noted that the story by BusinessDay Newspaper titled, “Exposed The Sleazy Face of N306/$1, inside Nigeria’s racket where faceless agents pocket over N32bn annually” was unfounded and untrue.
It therefore, challenged the BusinessDay Newspaper to provide the names of agents involved, and also verifiable evidence of collusion.
The CBN said: “The management of the CBN wishes to react to the report wherein BusinessDay Newspaper alleges that faceless agents in Nigeria are exploiting the country’s multiple exchange rates to devastating effects and allegedly with the backing of regulators.
“The CBN wishes to state unequivocally that this report is unfounded and untrue and challenges BusinessDay to provide the names and also verifiable evidence of collusion between these faceless agents and officials of the CBN, who are working to perpetuate these so called Forex (Fx) racket schemes.
“We would also urge the management of BusinessDay to contact the CBN prior to making such spurious allegations, as we were denied the benefit of responding to this article.
“The CBN wishes to remind BusinessDay, as most financial observers have noted, that the Fx rates across various markets governed and regulated by the CBN have been converging, leaving no room for arbitrage opportunities in Nigeria’s Fx market.
“For avoidance of doubt, the CBN will continue to act in the best interest of Nigeria and shall ensure it remains focused on its core mandate of sustaining the stability in the Fx market.”
African leading commercial bank, Absa (Amalgamated Bank of South Africa) has ruled out the acquisition of a Nigerian bank in the pursuit of its aggressive growth strategy.
Absa’s Chief Executive Officer, Maria Ramos, disclosed this to News men on the sidelines of the World Economic Forum in Davos yesterday. Ramos said while Nigeria is a big and exciting banking market, Absa would build its presence in the country slowly and organically and did not plan to become a top lender. She stated: “For us to be in the top three or four would mean us going out and acquiring a Nigerian business.
The Nigerian banks are big and expensive and we wouldn’t be looking to do that.” South Africa’s third biggest lender had not previously been so explicit on its intentions in Nigeria, which is set to become a lively battleground in the fight for Africa’s banking market. It has highlighted the country as key to its plan to double its share of banking revenues on the continent to 12 percent – one of a series of ambitious targets Absa has set as it tries to carve out a name for itself after separating from Britain’s Barclays in 2017.
Ramos was however cautious on the potential in Nigeria, described by McKinsey last year as a “sleeping giant” where banking penetration is far lower than expected relative to income levels. She maintained that the market was “big and exciting” and remains important, but noted that Absa was concentrating on the “huge amount of opportunity” in its other markets outside South Africa.
The Central Bank of Nigeria (CBN) has injected $289.76million into the retail secondary market intervention sales and CNY38.70million into the spot and short- tenored forwards segment of the inter-bank foreign market.
The Director, Corporate Communications Department, CBN, Isaac Okorafor, who disclosed this in a statement, noted that the dollar-denominated interventions were for transactions in the agricultural and raw materials sectors.
He also added that on-the-spot and short- tenored sales in Chinese Yuan were similarly for the payment of Renminbi-denominated Letters of Credit for agriculture and raw materials based on bids the apex bank received from authorised dealers.
Okorafor also reaffirmed CBN’s support to the inter-bank foreign exchange market, saying: “The management of the CBN is pleased with the level of stability at both the Bureau de Change and the investors’ and exporters’ window of the foreign exchange market.
“The bank is also satisfied with the current implementation of the bilateral currency swap agreement with the Peoples Bank of China, coupled with a recent inflow of about $2.8bn Eurobond.”
Okorafor also expressed confidence that the foreign exchange market in Nigeria would remain stable in the coming months and beyond, with the marginal increase in the country’s external reserves.
It would be recalled that the CBN had earlier injected $210 million into the wholesale, small and medium enterprises and invisibles windows of the inter-bank foreign exchange market on January 17.