The naira is expected to be stable at the official interbank and parallel markets next week following the sale of $313m by the Central Bank of Nigeria to clear a backlog of dollar demand from airlines and other firms.
The local currency was quoted at 455 to the dollar at the parallel market on Thursday, against 458 to the dollar last week, while there was no quote on the official window more than two hours after the market opened, Reuters reported.
The naira has consistently closed around 305.5 to the dollar at the interbank market since August due to daily intervention in the market by the CBN.
The International Money Transfer Operators have also been providing dollar liquidity to support the local currency at the Bureau De Change window.
The Kenyan shilling is expected to trade in a tight band next week with support from foreign exchange inflows from investors chasing government debt offset by dollar demand from importers as the month draws to an end, according to traders
On Wednesday, commercial banks were quoting shilling at 101.25/35, and it barely moved from 101.20/30 last week. Markets were closed on Thursday for a public holiday.
The Tanzanian shilling is expected to strengthen modestly next week, helped by firms selling dollars to meet end-of-month payments and foreign exchange inflows from agriculture export earnings.
Commercial banks quoted the shilling at 2,184/2,189 to the dollar on Thursday, weaker than 2,178/2,188 a week ago.
“We expect the shilling to appreciate slightly next week due to dollar sales by companies to meet end-of-month obligations and inflows from the agriculture sector, particularly cashew nut exports,” a trader at CRDB Bank, Moses Kawiche, said.
Zambia’s kwacha is likely to remain stable against the dollar next week with corporate demand for the currency to meet end-of-month payments balanced by rising dollar demand to buy imports.
At 0937 GMT, commercial banks quoted the currency of Africa’s second-largest copper producer at 9.8000 per dollar from 9.9150 a week ago.
“Although companies will be converting dollars to pay salaries and other month-end obligations, demand for hard currency is also rising because of imports ahead of Christmas,” independent financial analyst, Maambo Hamaundu, said.
The Ugandan shilling is forecast to make slim gains next week, supported by foreign exchange inflows from coffee exports and commercial banks paring long dollar positions.
At 0900 GMT, commercial banks quoted the shilling at 3,430/3,440, stronger than last Thursday’s close of 3,445/3,455.
A trader at Diamond Trust Bank, David Bagambe, said a central bank liquidity mop-up of excess shilling liquidity would also help.
The equities market rebounded on Thursday as the Nigerian Stock Exchange market capitalisation appreciated by N41bn.
A total of 111.898 million shares valued at N4.012bn were traded in 2,699 deals.
The NSE market capitalisation rose to N9.479tn from N9.438tn, while the NSE All-Share Index closed at 27,598.34 basis points from 27,478.04 basis points.
The Nigerian bourse recovered from a three-day downward trend, up by 0.44 per cent from the last close on ample gains in the banking sector.
After receding to a negative year-to-date return in the previous session, the financial services sector recovered from its brief year-to-date loss position and was at the heart of the ASI turnaround, after investors received the nine-month 2016 earnings of Guaranty Trust Bank Plc, which appreciated by 5.11 per cent, coupled with advances in FCMB Group Plc by 3.67 per cent and Access Bank Plc by 1.44 per cent.
The oil and gas sector snapped a five-day rout following gains in Seplat Petroleum Development Company by 1.94 per cent and Oando Plc by 1.39 per cent. Mobil Oil Nigeria Plc also inched higher by 0.54 per cent amid news of Exxon Mobil’s (majority shareholder) decision to sell its 60 per cent equity stake to NIPCO Investments Limited.
The consumer goods sector rose by 0.12 per cent with mixed performances across International Brewery Plc by five per cent, Guinness Nigeria Plc by 1.38 per cent, while Dangote Sugar Refinery Plc lost by 2.19 per cent.
Stocks in the industrial goods sector closed flat.
Market breadth turned positive with 20 advances and 14 declines.
On the global scene, while Asian stocks closed higher, European markets traded slightly lower ahead of the European Central Bank meeting later today and as investors digested a raft of disappointing earnings. The United States futures pointed to a higher open.
On what will shape today’s trading session, analysts at Vetiva Capital Management Plc, said, “We highlight that market sentiment turned around, particularly within the banking sector following earnings release from GTB – a pointer of what to expect from other banks.
“We think this underscores our erstwhile view that investors currently maintain a wait-and-see approach to Q3 earnings and believe this approach will persist in the sessions ahead.”
Meanwhile, the interbank call rate dropped further by 409 basis points to 14.83 per cent on the back of improved liquidity. At the foreign exchange interbank market, the naira remained unchanged against the dollar at N304.75 while the one-year forward rate fell to N348.14 (previous: N355).
The Central Bank of Nigeria held a Primary Market Auction in Wednesday’s session, selling N21bn, N28bn, and N32bn on the 91-day, 182-day, and 364-day bills at stop rates of 14 per cent, 17.09 per cent, and 18.30 per cent respectively (effective yields: 14.51 per cent, 18.68 per cent, and 22.39 per cent).
In Thursday’s session, the Treasury bills market extended its bullish run as yields declined 28 basis points on average. With the 182-day bill settling at a lower rate than secondary market levels, buying was weighted around the mid end of the space with yields on the 105 day-to-maturity, 203DTM, and 266DTM bills dropping to 17.53 per cent, 18.08 per cent, and 18.56 per cent respectively.
Meanwhile, the bond market traded nearly flat as large advances on the 16.39 per cent FGN January 2022 bond (up 13 basis point to 14.88 per cent) offset moderations on the 14.20 per cent FGN March 2024 and 12.50 per cent FGN January 2026 bonds which moved three basis points and four basis points to 15.01 per cent and 15.29 per cent respectively.
Guaranty Trust Bank Plc yesterday reported a jump of 59 per cent in profit after tax (PAT) to N119.9 billion, following a major boost from foreign exchange (FX) revaluation gains. The unaudited results made available to market operators by the Nigerian Stock Exchange (NSE), showed gross earnings of N329.284 billion, up by 43.5 per cent compared with N229.4 billion in the corresponding period of 2015. Net interest income rose by 10.5 per cent from N120.13 billion to N132.7 billion, while net fees and commission income grew by 28.2 billion to N37.5 billion, up from N48.13 billion. However, net impairment loss on financial assets soared by 570 per cent to N57 billion, from N8.5 billion in 2015. Other income, from FX revaluation gains, jumped up from N6.957 billion to N93.95 billion.
PBT improved to N141 billion, up from N92.1 billion, while PAT rose by 59.6 per cent to N119.92 billion, compared from N75.2 billion in 2015. Assessing the result for the third quarter(Q3), analysts at FBN Quest said the performance showed strong PAT of N46 billion, up 97 per cent, off the back of a PBT result of N49 billion, up 71 per cent. FBN Quest said: “PAT growth was stronger due to other comprehensive income of N4.3 billion, which was up 172 per cent. Other comprehensive income was boosted by FX translation gains. The market had been expecting tangible fx gains in GTBank’s results in recent weeks. Similar to Q2, although the FX revaluation gain will be welcomed by the market, the scale of the provisions, though down quarter/quarter, will likely concern investors. Nonetheless, the underlying numbers were quite strong enough to provide an offset, with both funding income and non-interest income up, by 34 per cent and 184 per cent to N53.6 billion and N46.3 billion respectively.”
According to the analysts, , Q3 PBT beat by 18 per cent on the back of positive surprises on both income lines while PAT was ahead by 22 per cent. “Funding income and non-interest income were both ahead by 29 per cent and 53 per cent respectively to more than offset negatives on both the operation expenses (opex) and provision lines. Provisions negatively surprised by around 230 per cent. On an annualised basis, GTBank’s nine months 2016 PBT tracks ahead of both full year consensus estimate of N151 billion and management guidance of N125 billion,” they said.
FMDQ OTC Securities Exchange has introduced short-term bonds to the Nigerian fixed income market.
The Exchange, on Wednesday, said this was achieved through its various engagements and the subsequent approval of the action by the Securities and Exchange Commission.
As an innovation-driven Exchange focused on powering growth, through product and market development, the FMDQ confirmed that it carried out extensive consultations with stakeholders in the Nigerian financial market space before introducing the STBs.
The STBs are short-term debt instruments issued by corporate entities for tenors of between one year and three years.
In addition to bridging the funding gap between short- and medium- to long-term debt instruments, the STBs are designed to serve the liquidity needs of the medium to large creditworthy corporates and commercial entities by providing an alternative/competitive source of financing to bank loans.
“The STBs are beneficial to the debt capital market as they will serve to boost the investment product bouquet for the buy-side (which comprises, amongst others, the Pension Fund Administrators), offshore investors and other market participants,” the statement added.
Furthermore, SEC also approved the FMDQ short-term bonds registration process and listing rules, which were developed in furtherance of the FMDQ’s commitment to provide effective market regulation and governance for the markets under its purview.
The STB rules served as a guide to issuers, the STB sponsors and the investing public, among others, the statement said.
It also stated, “The rules outline the governance structure for the STB issuances as well as the procedure for the registration of prospective STB issuances.
“As a consequence of SEC’s approval of the STB rules, the FMDQ will serve as the Exchange through which the primary due diligence for all the STB issuances, consequently ensuring an expedited time to market, shall be conducted and also provide its efficient platform for the registration and listing of all STBs.”
With the recently launched naira-settled OTC Foreign Exchange Futures product in its 4th successful trading month and about $4bn worth of contracts traded on the FMDQ, the Exchange said it had continued to articulate ways to improve the performance of the market.
“The importance of a fully functional and efficient DCM in powering the growth and development of Nigeria cannot be overemphasised. Even in the light of the present economic climate, the FMDQ remains keen and unrelenting in its efforts to actively work with relevant stakeholders to deliver on its agenda of making the Nigerian financial market globally competitive, operationally excellent, liquid and diverse,” the statement noted.
As the global crude oil benchmark continued to trade above the $50 per barrel mark on Tuesday, economic and energy experts said the price rally would help soften the recession rocking the country and support economic recovery.
They, however, described as more important the need to ramp up the nation’s crude oil production, which has been significantly disrupted by the recent upsurge in militant attacks in the Niger Delta.
The militant attacks on oil and gas facilities pushed oil shipments to as low as 1.38 million barrels per day in August from a high of 2.1 million bpd in January.
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said late last month that production had risen to 1.7 million bpd.
Brent crude, against which Nigeria’s oil is measured, had jumped to a one-year high of $53.73 per barrel last week. It traded around $52 per barrel on Tuesday.
The Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane, in a telephone interview with our correspondent, said the rise in oil price would go a long way in getting the country out of recession, stressing the need for production to increase.
He said, “I am more optimistic now about the prospect of getting out of the recession. One, the price is good; two, the production is up; and three, the Nigerian President and the economic management team are not in denial as to the fact that we have an economic crisis. Therefore, they are unlikely to take it lightly; they will use every resource that comes their way and apply it diligently towards economic recovery and stimulus package.
“So, it is a positive news. But it is not exogenous variables like oil price that will do the trick; the game changer is the tenacity of the Nigerian leadership to stay the course. Variables within our control are the things that are going to get us of the recession.”
Rewane does not expect the oil price to reach $70 or $100, saying, “It is going to stay within the range of $50 and $55.”
“The budget benchmark for 2017 is $42 a barrel; so, at $52, we are $10 above, and $10 is about 25 per cent of $40. So, we are about 20 per cent above the budget benchmark. As long as we are investing it, then we will be on the route to recovery,” he added.
The Chairman and Chief Executive Officer, International Energy Services Limited, Dr. Diran Fawibe, said, “As a matter of fact, if ever the price is $45 and our production can reach two million or 2.2 million barrels per day, obviously, it will help us tremendously.”
According to him, two key things that the government needs to have to be able to turn the economy around are the increase in revenue generation and foreign exchange earnings, and these are anchored on the increase in crude oil production.
“Of course, if the price of oil can stay at $50 and above, it will help. But one is not too sure whether the over $50 price is sustainable given the current situation with regards to production by members of the Organisation of Petroleum Exporting Countries,” Fawibe said.
Nigeria’s overnight interbank rate was quoted at a record high of 150 per cent on Tuesday, two days after lenders placed funds with the central bank to participate in last Friday’s currency forward auction, traders said.
Reuters revealed that few deals were done on Tuesday due to a shortage of naira on the money market, with lenders loath to place funds among themselves until the result of Friday’s currency auction was published.
The central bank last week held a two-month dollar forward auction to clear a backlog of demand from airlines, manufacturers and other companies, as the currency crisis deepened. It later directed lenders to re-submit bids again on Monday, traders said.
Traders said rates spiked because lenders were barred from central bank’s repo window before any currency auction and they had naira funds locked away with the regulator on the day of the auction to pay for the dollars which they expect to receive in two months’ time. The central bank was yet to announce result of the auction.
“Most banks are not quoting rates because they are still waiting for the result of the FX auction,” one trader said. The regulator has been tightening liquidity and intervening directly with dollar sales to commercial lenders to support the ailing naira, hit by the fall in oil prices, Nigeria’s economic mainstay.
Overnight rates closed at 128 per cent on Monday after they opened at 100 percent, up from 14 per cent on Thursday. The money market ended with no deals on Friday as lenders held onto naira to be able to participate at the auction.
Meanwhile, the naira sustained its appreciation on the parallel FX market as it closed yesterday at N453 to the dollar yesterday, stronger than the N455 to the dollar it closed the previous day.
The Bank of Industry (Bol) and the Benue State government have launched a N2billion-Micro Small and Medium Enterprises (MSMEs) development fund to boost the entrepreneurial potentials of citizens in the state.
Under the financing model, both parties will contribute N1billion each for on lending to mainly businesses that have high employment generating potentials and value addition to local raw materials.
Benue State Governor, Dr. Samuel Ortom expressed satisfaction over the initiative and commended leadership of the bank under the acting Managing Director/Chief Executive, Mr. Waheed Olagunju for his foresight and remarkable strides since assuming office.
He urged President Muhammadu Buhari to appoint the acting BoI boss as substantive MD, noting that having worked in the bank for over two decades, he is more than qualified to lead the develop finance institution.
Nevertheless, Ortom appealed to entrepreneurs in the state to take advantage of the loan facilities, insisting that it would not be disbursed along party lines.
He said only those who have viable business proposals in the areas where the state currently has comparative advantage would be given the financing support.
Meanwhile, Olagunju said the intention in the state brought the volume of MSME Funds being managed on behalf of 21 state governments to N18.3 billion.
Four out of the 21 states that had enrolled in the scheme, joined in the last eight months when the MD took over office.
He added that the fund would help entrepreneurs in the state add values to their agricultural produce and boost employment generation potentials. He urged the governor to create industrial parks where beneficiaries of the loans would be able to leverage on infrastructure facilities to reduce operation cost.
According to him, “I suggest the governor establish industrial parks, at least, one in each senatorial district where amenities will be provided and where other infrastructure will be provided. They will share the facilities.”
In furtherance of its quest to improve the wellbeing of communities where it does business, Fidelity Bank Plc, in partnership with Gazelle Academy and Waziri Umaru Federal Polytechnic, Birnin Kebbi have empowered 500 Nigerians through entrepreneurial skills.
The programme, which was part of the bank’s corporate social responsibility (CSR) initiatives, was aimed at equipping Nigerian youths with skills and capabilities needed to take advantage of available opportunities to drive socio-economic development. Speaking at the launch of the 5-day youth empowerment programme held in Kebbi State, the ank’s Managing Director/Chief Executive Officer, Mr.Nnamdi Okonkwo, pointed out that the programme seeks to empower the Polytechnic community by creating a new generation of business owners amongst students.
Okonkwo who was ably represented by the bank’s Branch Leader, Sokoto Strategic Business Unit (SBU), Abdulrahman Ibrahim, said the programme was designed to promote micro, small and medium scale enterprises’ (MSMEs) growth by encouraging students from tertiary institution to become self-reliant in different aspects of entrepreneurship.
Ibrahim further explained that students would receive requisite training in various stages by the consultants throughout the duration of the exercise.
He said students would be trained on fish farming, tailoring, stoning, makeup and bread making. , However, the maiden edition of the programme which held at the University of Nigeria, Nsukka (UNN), Enugu State, recorded huge successes as it left an indelible mark on the lives of the students who participated in the week-long event.
Depending on area the trainees received training, Ibrahim noted that the bank will determine what sort of assistance to offer them at end of the program.
The Commissioner of Higher Education, Alhaji Maigari Abdullahi who represented the State Governor at the event, commended the organisers for the event while restating the commitment of state government in promoting vocational education in the state.
The overnight interbank lending rate soared to a record high of 128 per cent on Monday on naira cash shortages after commercial banks funded their account with the Central Bank of Nigeria to participate in last Friday’s currency forward auction.
Overnight rates opened at 100 per cent on Monday, traders said, after the money market ended on Friday with no deals as commercial lenders held onto naira to be able to participate in the auction, Reuters reported.
Overnight money had traded at 14 per cent on Thursday.
The CBN has been tightening liquidity and intervening directly with dollar sales to banks to support the ailing naira, as the economy has been hit by the fall in oil prices.
The CBN had on Friday held a two-month dollar forward auction to clear a backlog of demand from airlines, manufacturers and other companies, as the naira crisis deepened.
However, it debited customers’ naira accounts on the day of the auction but would deliver the dollars in two months’ time, traders said, adding that the move had soaked up liquidity from the money markets.
The central bank intervened again on Monday with dollar sales to support the naira, which ended at 305.50 per dollar, traders said.
Meanwhile, the Debt Management Office has borrowed N95bn ($312.50m) at an auction of local currency bonds, according to the DMO data
The DMO said the 2021 maturing debt attracted higher yield, while the 2026 and 2036 papers fetched lower returns.
The debt office sold N10bn of the 2021 paper at 15.29 per cent, compared with 15.14 per cent at the previous auction last month.
The DMO had initially offered N35bn of the five-year bond.
It also sold N45bn of the 2026 debt at 15.47 per cent, lower than 15.53 per cent, and N40bn of the 2036 debt at 15.48 per cent, compared with 15.59 per cent.
The debt office sold more than the initially advertised amount of N35bn apiece for the 2026 and 2036 papers at the auction, Reuters reported
Investors had demanded yields ranging between 12 per cent and 17 per cent for all the debts on offer, but the debt office was not willing to pay more for the debts, one trader said.
The Federal Government has said it will borrow about N900bn locally to finance part of the N2.2tn deficit in the 2016 budget.
The DMO issues local bonds as part of measures to finance the government budget deficit and also to help manage liquidity in the banking system.
The Central Bank of Nigeria has said it is planning to borrow N1.77bn via Treasury bills in the last three months of the year.
In its fourth quarter Treasury bill issuance programme, the apex bank said it would raise about N815.37bn, comprising 91 days, 182 days and 364 days’ debt instruments.
In addition to the above, the central bank is also planning to borrow about N952.05bn as rollover in the three categories of the instruments.
The Federal Government distributes revenues from crude exports and taxes among the three tiers of government every month.
Thousands of United Kingdom and Canadian visa applicants and intending travellers wanting to book hotels online were stranded on Monday as Deposit Money Banks stopped their naira debit cards from being used for dollar and other foreign currency-denominated transactions.
The DMBs had on Friday stopped their naira debit cards from dispensing dollars to customers via Automated Teller Machines in foreign countries, as well as disallowed the cards from being used for online and Point of Sale transactions.
The banks cited dollar scarcity and volatility in the foreign exchange market as reasons.
Guaranty Trust Bank, Standard Chartered Bank and Stanbic IBTC Bank have already stopped the withdrawal of foreign currencies from the ATMs by their customers who travel abroad and cut the value of their online and PoS transactions to $100 per month.
The development made the UK visa applicants wanting to pay the mandatory $118 for the six-month and $499 for the two-year visas through their naira debit cards to be stranded.
Payment for the UK visa is done online via the government-designated website.
Travelling agents and applicants said they could not complete the UK visa application procedures on Monday. They said payments with naira debit cards of Guaranty Trust Bank Plc, Ecobank Nigeria, United Bank for Africa Plc and other banks were declined.
It was further learnt that intending travellers and visa applicants wanting to make hotel booking online could not do so as their transactions via the naira debit cards were declined by the banks.
“This is terrible. I am finding it difficult to pay for my UK visa online. I have filled the form. I have got to the payment section and I was trying to pay online but the transaction was declined,” a visa applicant, who identified himself simply as John, told our correspondent at the UK visa application centre in Victoria Island, Lagos on Monday.
Travelling agents assisting the visa applicants to fill their forms said they found it difficult to make payment for UK and Canadian visas online using naira debit cards.
The Chief Executive Officer, Flying Partner, a Lagos-based travel agency, Mr. Kunle Oladele, said, “We could not make payment for the UK and Canadian visa applications online. The few payments we made were done through our partners in foreign countries, who used international debit cards issued by foreign banks.
“We called our partners in South Africa, UK and the United States to do so for us. It is very terrible. I am not sure we can continue like this. Canadian visa applicants will have to go to the country’s visa office now.”
Bank officials told our correspondent on Monday that they could not help the situation, citing the scarcity of dollars as the reason for the suspension of visa payment services.
“There is no dollar again in the country. There is nothing we can do about it,” an official of GTBank told our correspondent on the condition of anonymity.
Meanwhile, hundreds of customers besieged banking halls on Monday to apply for dollar debit cards, a day after the banks suspended naira debit cards from working overseas.
When our correspondent visited some bank branches, crowds of customers were seen filling forms to open domiciliary accounts and to obtain dollar debit cards.
Stanbic IBTC Bank and Standard Chartered Bank Nigeria had on Friday advised customers seeking to carry out transactions denominated in foreign currencies to apply for dollar or pound sterling debit and credit cards.
According to them, such cards will be linked to the customers’ domiciliary accounts.
In a notice to customers on Friday entitled: ‘Review of the international spending limit on your naira MasterCard’, GTBank stated, “We write to inform you of the monthly spending limit currently applicable when using your GTBank naira MasterCard for international payments via PoS and online.
“(The) previous monthly limit via PoS and online was $250; the new monthly limit via PoS and online is now $100. Kindly note that ATM cash withdrawal on your naira MasterCard is now only available in Nigeria.”
The development has also made students studying in the UK, US, Canada, Ukraine and other parts of the world to face more challenges getting their monthly stipends from their parents.
Most of the students had relied on ATM card withdrawals to get their monthly stipends from their parents before now.
Although other banks have yet to announce the suspension of ATM card services abroad, findings by our correspondent showed that many lenders had reduced drastically the amount that customers could withdraw via ATMs abroad.
The decision by some banks to suspend overseas ATM card services and online forex transactions came barely one week after the Central Bank of Nigeria, through the Bankers’ Committee, raised concerns about what it called the indiscriminate and suspicious manner in which some bank customers were spending dollars and other foreign currencies abroad through their naira debit cards.
Consequently, the regulator said it had concluded that bank customers who spent above the $50,000 annual forex limit it imposed would be barred from the forex market.
Dollar scarcity has been ravaging the economy after the price of crude oil, Nigeria’s main forex earner, crashed from $115 per barrel in June 2014 to around $51.4 per barrel currently.
The nation’s foreign exchange reserves have been depleting since then.
Last Wednesday, the country’s external reserves hit an 11-year low of $24.21bn, the latest data posted on the CBN website showed.
