Forex responsible for kerosene price hike – IPMAN – Punch

A factional Chairman of the Independent Petroleum Marketers Association of Nigeria, in Kwara, Alhaji Olanrewaju Okanlawon, has ascribed the recurring hike in the price of kerosene to the unstable foreign exchange occasioned by the lingering economic recession.

Okanlawon said on Saturday that the association should not be blamed for the series of complaints emanating from members of the public particularly from the domestic users of the cooking substance.

He cleared the association of any deliberate move to inflict hardship on the masses, who he noted, were already facing hardship due to economic recession.

He pointed out that it would be unfair to compound the economic situation of the people by needlessly jacking up the price of kerosene in an attempt to make additional profit.

According to him, the domestic cooking commodity is being imported and the situation will persist unless government encourages right measures to stabilise the nation’s economy.

He said, “It is necessary for the government to effect surgical operation on the country’s monetary policy to reduce over-dependence on dollar.

“It remains the determinant factor in the foreign exchange policy of the Federal Government.”

The petroleum marketer, however, said that the effect of foreign exchange was not peculiar to petroleum sector, saying it had become pervasive in every sector of the economy.

He urged government to devise a timely action to stem the tide.

He said, “The major factor that is bringing everything up (the rise) is in dollar, because most of these products (kerosene and others) are imported.

“As long as kerosene is sourced with dollar, definitely the price will go up.

“If you are talking about high cost of kerosene and cooking gas, what do you have to say about aviation fuel that has also risen?’’

According to him, as long as the dollar is going up, the multiplier effect of it is rising up of prices of goods.

He said, “It affects everything because almost everything we are using in this country is sourced with dollar.

“If government can manage the monetary policy by ensuring that dollar comes down, prices of goods will come down too.”

NAN

CBN reduces weekly forex sale by 25% as Nigeria’s Eurobonds appreciate – Financial Watch

The Central Bank of Nigeria (CBN) last week reduced its weekly foreign exchange sale to banks by 25 percent, even as prices of Nigeria’s Eurobond rose amid renewed investor’s interest.

Previously the CBN have been selling $7.5 million dollars per week    to banks through the interbank foreign exchange market. Financial Vanguard investigations however reveal that the apex bank sold $6 million to banks last week, indicating 25 percent reduction.    The dollars were sold at an average interest rate of N304 per dollar.

The reduction notwithstanding, the Naira appreciated against the dollar at the interbank market as the interbank foreign exchange rate dropped by 0.12 percent to N314.625 per dollar.

Foreign reserves

The Naira however depreciated against the dollar to N493/ USD at the parallel market. Analysts at Cowry Assets, a Lagos based investment firm, however predicted stability of the Naira this week, following steady rise in the nation’s foreign reserves.

According to the CBN the foreign reserve rose further by $373 million to $26.22 billion on Wednesday January 5th, from $25.84 billion on Thursday December 30, 2016.

‘’This current week, we expect stability of the Naira exchange rate as the    increasing  reserve spur confidence on the ability of the Central Bank    of Nigeria (CBN) to intervene more aggressively in the official market window”, said Cowry Asset analysts.

Eurobonds appreciate

Meanwhile, Nigeria’s Eurobond listed on the London Stock Exchange enjoyed price appreciation following increased demand by investors. According to data of closing prices and yields of Eurobond posted by the Debt Management Office (DMO), the 10 year, 6.75% January 28, 2021 bond, gained $2.03, while its yield fell to 5.67 percent; the 5 year, 5.13% July 12, 2018 gained $0.43 while its yield fell to 3.18 percent; the10 year, 6.38% July 12, 2023 bond gained      $2.62 while its yield fell to 6.36 percent.

However, prices of FGN bonds traded on the Over The Counter, OTC, secondary market depreciated while yields rose due to drop in market liquidity triggered by treasury bills sale by the CBN.

Reacting to the developments analysts at Meristem Securities Limited, aanother Lagos based investment firm, stated in the company’s investment outlook for this week that ‘’activities in the Treasury bond space were characterized by bearish sentiments.

Bargain hunting activities

The average bond yield advanced by 0.31 percent at the close of the week to 16.67%.

‘’In the coming week, we expect pockets of bargain hunting activities on bonds currently trading at low prices.”

Meanwhile, the DMO on Friday announced its intention to raise about N430 billion through bonds sale in the first quarter of this year.

According to the bond issuance programme for the first quarter of 2017, Q1’17, posted on its website on Friday, the agency sell      between N110 billion    and N140 billion bonds maturing in 2021 and 85 billion, as well as N105 billion bonds    in 2026. It will also sell between N45 billion and N 55 billion in bonds maturing in 2027 and between N100 billion and N130 billion of bonds maturing in 2036.

Naira may reverse loss this week – Punch

By Tunji Abioye

The naira is seen strengthening in the near term as Bureau De Change operators expect dollar supplies from international money transfer agents to boost liquidity.

The local currency held steady at 490 to the dollar on the parallel market on Friday, the same level as the previous week, while the naira was quoted at 305 to the dollar at the official interbank window, Reuters reported.

“We continue to see the naira hovering between 400 and 480 as the Central Bank of Nigeria fine-tunes its policy to streamline rates and as we see an increased dollar supply,” the President, Association of Bureau De Change Operators, Aminu Gwadabe, said.

Economic and currency experts have expressed divergent views over the outlook of the naira this year.

While some said the naira would experience further decline at the parallel market this year, others said the volatility noticed in the exchange rate last year could not continue this year.

“We will continue to see reasonable volatility of the naira during the first half of this year. The fundamental issues underlying the volatility of the naira have not been addressed,” a currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, said.

According to Ezun, the naira will continue to depreciate at the parallel market while the Central Bank of Nigeria will keep managing the official rate around 305/dollar.

“It will depreciate further but there has been some resistance around 500/dollar. The CBN seems to have come to the end of monetary policy because it is the issue of liquidity,” the Ecobank analyst added.

For a director at the Union Capital Markets, Mr. Egie Akpata, the direction of the naira-dollar exchange rate this year will be determined by the CBN’s policies, oil output and price.

He said, “A lot depends on what the CBN does because exchange rate is driven by the kind of administrative management in place at the forex market. The direction of the oil price and output this year will also determine which way the exchange rate will go.”

An economic analyst at EY, Mr. Bisi Sanda, believes most economic indicators are moving in the direction that is favourable to the country.

He, however, said that unless the economic and forex managers used this to the country’s advantage, the naira and the economy in general would be thrown into further chaos.

Sanda said, “Everything depends on what the Federal Government decides to do. For example, we don’t need more than 3000 Bureau De Change operators in this country, and the CBN does not need to  allocate forex to them.

“The leakages that have characterised forex management in the country are the reason for the current volatility in the exchange rate.  The oil output and price are now going in the directions that are favourable to us. So we should take advantage of this.”

Nigeria’s oil exports face fresh disruption – Punch

By ’Femi Asu

The nation’s crude oil production and export have hit a fresh snag following the shutdown of the Trans Niger Pipeline, one of two major pipelines transporting the Bonny Light crude grade for export.

The TNP, which is operated by Shell Petroleum Development Company of Nigeria Limited, was shut by the oil major after a fire at Kpor in Ogoniland, which may worsen the country’s output due to unplanned disruptions.

According to a report on Shell’s website, the pipeline transports around 180,000 barrels of crude oil per day to the Bonny Export Terminal and is part of the gas liquids evacuation infrastructure, critical for continued domestic power generation (Afam VI power plant) and liquefied gas exports.

Nigeria’s daily output dropped by 200,000 barrels to 1.45 million barrels per day in December 2016, ending three months of gains as the country struggled to restore capacity after a year of militant attacks on oil infrastructure.

Production fell to 1.39 million bpd in August, the lowest level since 1988, according to data compiled by Bloomberg.

Shell has yet to lift the force majeure it declared on the export of Forcados since February last year.

The force majeure, a legal clause that allows it to stop shipments without breaching contracts, came a week after the Forcados export line was attacked by militants in the Niger Delta.

The Nigerian National Petroleum Corporation said at Forcados terminal alone, about 300,000 barrels of oil per day were shut in since February 2016 following the force majeure declared by the SPDC.

Loading delays were reported to have plagued ExxonMobil’s production after workers in Nigeria staged industrial action late last year.

Tunde Bakare condemns FG’s forex policy, high interest rates – Punch

The Founder of The Latter Rain Assembly and convener of the Save Nigeria Group, Pastor Tunde Bakare, says the Federal Government must change its foreign exchange policy and lower interest rates to get the country out of recession.

According to him, the country’s multiple naira exchange rates are confusing and discriminatory, while the interest rates are punitive and stifle creativity.

Bakare said this in his ‘State of the nation broadcast’ on Sunday, during which he noted that the hardship Nigerians were facing had led many of them to associate the change promised by the President Muhammadu Buhari-led government with “retrogression and suffering”.

He, however, explained that the government could turn things around by reviewing some of its economic policies.

He said, “The way forward is not so complex for those interested in genuine change.

“To begin with, the confusing and discriminatory multiple dollar to naira exchange rates – favourable to some and not so favourable to others, and without doubt confusing for potential investors – must be discarded while a more reliable and predictable exchange rate, mutually beneficial to our people and economy and attractive to foreign investors, should be put in place.”

“Similarly, prohibitive and punitive interest rates must be lowered in order to liberate the creative ingenuity of our people as well as encourage those who can access mortgages at affordable rates to become homeowners, especially if our Pension Scheme is up-to-date and robust.”

He explained that the multiplier effect of the removal of the bottlenecks in the economy will cushion the effect of the current recession on our people.

“These are just two low hanging fruit solutions that demonstrate a commitment to turning the tide of decline,” Bakare, who was Buhari’s running mate in the President’s unsuccessful bid in the 2011 presidential elections, said.

Despite criticising aspects of the Federal Government’s economic policies, Bakare insisted that the Buhari administration had made progress in its quest to fulfil its promises to Nigerians.

He faulted critics of Buhari, who have attributed the country’s current challenges to a lack of direction by his administration.

The cleric argued that the government had made progress in combating insecurity, tackling corruption and dealing with unemployment through the diversification of the economy.