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Falling oil price weakens naira

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The naira declined last week as Bonny Light crude, one of Nigeria’s main export grades, fell for the third day last Friday, dropping by 0.6 per cent to $103.41 per barrel. The local currency weakened by 0.1 per cent to N158.63 per dollar, putting its monthly decline to 0.4 per cent.

The Federal Government depends on oil export for 80 per cent of its revenue and 95 per cent of its export income. Analysts blamed naira’s fate on speculation that foreign investors who sold Nigeria’s debt as oil prices declined.

The yield on the 2022 securities rose 23 basis points, or 0.23 percentage point, to 11.86 per cent, the highest since April 29. “It looks as if the global risk-off environment is feeding into Nigerian assets, broadly in line with what other emerging markets are experiencing,” Samir Gadio, an emerging-markets strategist at Standard Bank Group Ltd told Bloomberg.

The Central Bank of Nigeria (CBN) on May 23 and 24, mopped up over N338 billion via treasury bills and Open Market Operation (OMO) bills to ensure price stability. The liquidity rush highlighted inflows from the monthly Federation Accounts and Allocation Committee (FAAC) injection.

However, Currencies Analyst at Ecobank Nigeria hinted that with market liquidity of about N222 billion on May 24, there might be another round of OMO bills auction in the coming weeks to ensure price stability.

Analysts insist that over the short term, the naira will likely continue to trade on the interbank market within the CBN’s three per cent band either side of N155 to a dollar.


Excess Crude Account

Balance in the Excess Crude Account (ECA) fell below $6 billion after drawing of $1 billion in April, FBN Capital, an investment and research firm said quoting data from the Federation Account Allocation Committee (FAAC). It explained that the Cash Reserve Requirement (CRR) of 12 per cent for banks may have to be hiked again if the fiscal stance is not tightened.

The research firm explained that the CRR remains a powerful piece of weaponry in the CBN’s arsenal because of the disproportionate influence of the banks in the markets. “The hike in the rate in July 2012 has been the single most important step taken by the CBN to hold the line on the naira exchange rate with relative ease. The CBN’s intervention is merely the latest to draw attention to the strains between monetary and fiscal policy,” it said.



The National Pension Commission (PenCom) has concluded plans to conduct an enrolment exercise for employees of Federal Government Ministries, Departments and Agencies (MDAs) that are treasury-funded.

A statement signed by its Head Communication Unit, Emeka Onuora, said the exercise was meant for employees in the service of the Federal Government who are due to retire between January and December, 2014 and would enable them get their retirement benefits. The exercise, he said, will take place between June 3, and July 11 this year.

He said the beneficiaries were selected after attaining 60 years of age or 35 years in service whichever is earlier or 65 years in service or 70 years of age for employees of tertiary institutions. He said the physical enrolment also covers those who have already retired but are yet to be enrolled.



The Chartered Institute of Bankers of Nigeria (CIBN) has reaffirmed its commitment to the development of manpower for the banking sector to achieve stable industry and economy. President/Chairman of Council of the Institute, Segun Aina, disclosed this during his address at the World Press conference to launch the institute’s 50th Anniversary, in Lagos. He noted that the institute has continued to fulfill the mandate for the promotion of practice of the banking profession in the country.

Aina said that CIBN would continue to make strategic effort to support banking sector, regulatory authorities and stakeholders as they pursue reforms in the midst of constant changes in the global financial landscape.

He said the Federal Government, state governments, National Assembly and other regulatory bodies rely on the institute for input into fiscal and monetary policies and related matters, adding that it had at various periods been called upon to serve in special committees of government on financial matters such as Committees on Drugs and Other Financial Crimes; Nigeria Accounting Standards Board (now Financial Reporting Council of Nigeria); Money Laundering Committee; FSS 2020; National Productivity Board among others.



The Debt Management Office (DMO) raised N500 billion from the sale of Federal Government’s bonds in the last five months, FBN Capital, has said.

The firm said a slowdown in issuance in the first half of the year was to be expected, given that this year’s budget projects domestic borrowing at N528 billion.

It said Nigeria’s domestic debt declined marginally by $41.1 billion in the first quarter of the year, adding that the country’s debt profile dropped from N6.54 trillion to N6.49 trillion within the period.

It explained that while this is not easily reconciled with comments last week by the Monetary Policy Committee (MPC) about fiscal slippage, the Federal Ministry of Finance said in February that it would retire bonds worth N75 billion.


Private sector credit

The Managing Director, Financial Derivatives Company Limited, Bismark Rewane said that maintaining a tight monetary stance would continue to slow down credit to the private sector and stifle growth.

His comments came after the MPC left the benchmark interest rate unchanged at 12 per cent during its last meeting,

In a report obtained by The Nation, he said analysts have mastered and can predict the committees’ decisions. Rewane said a decline in Gross Domestic Product (GDP) growth rate was not enough to move the votes in favour of rate reduction.

“Already, the National Bureau of Statistics reported a decline in GDP growth from 6.99 per cent in fourth quarter of 2012 to 6.56 per cent in first quarter of the year. This downward trend would continue if the MPC fails to pay heed to the call for stimulus,” Rewane said.



President, Chartered Institute of Taxation of Nigeria (CITN) John Jegede has said that an economy that is able to sustain its citizens must leverage on tax revenues, which he said is the most reliable source of revenue for national development and transformation.

Speaking at the institute’s induction for its members in Lagos, he told the inductees that their role is to assist the government and taxpayers to plug loopholes and bring into the tax net more individuals.

He said a situation where negligible percentage of taxable persons actually pays taxes is very disheartening and professionals must rise up to the challenge to ensure Nigeria’s economy is diversified through taxation.

Jegede said the institute is determined to collaborate with various stakeholders on training of tax practitioners in various organisations and agencies. “While commending stakeholders for their unalloyed support to the institute, it is my hope that the existing mutual co-operation between governments at all levels and the Institute would go a long way to improving the effectiveness of the various states’ revenue agencies while at the same time strengthening the confidence of taxpayers in the tax system,” he said.



Visa, global electronic payments company, has called for an improved use of e-payment products by entrepreneurs both within and outside the country.

Speaking at the BT Africa West Africa Expo and Conference in Lagos, Country Manager for Visa West Africa, Ade Ashaye, said the firm is committed to helping the country achieve its cashless banking initiative. “Visa is committed to helping move Nigeria to a cashless economy and share some of the benefits of secure electronic payments within the industry.” It hosted it with Future Group’s Business Traveler Africa.

He said Nigeria is growing as a destination for both leisure and business travel and rise in spending is a credit to the efforts of those promoting Nigeria as a tourist destination.



The Financial Institutions Training Centre (FITC) has launched new products meant to boost learning and professionalism in the financial sector. The Managing Director, FITC, Mrs Lucy Newman, named the products as FITC Virtual learning, FITC E-Recruitment Portal, and FITC Virtual Library. It developed the Nigerian version of the International Finance Corporation corporate governance and board leadership training curriculum, as well as the FITC new publications.

She said the products were relevant and should help the development of the financial sector and improve bankers’ knowledge of the financial sector.

The CBN Deputy Governor, Financial System Stability, Dr Kingsley Moghalu endorsed the products. He said there was need to improve bankers’ knowledge of operational risk. He said, “The management of operational risk needs to be improved and we know that one of the problems that affected the banking industry in the past was almost a complete failure of risk management. We must enhance the quality of banks in Nigeria through good risk management and corporate governance using proper regulatory frameworks.”


Bank to bank report

FirstBank of Nigeria Limited has partnered with LEGO, the world’s fourth largest manufacturer of children’s toys to introduce KidsFirst, one of the bank’s children products to the market.

At an exclusive cinema screenings to mark this year’s Children’s Day, the bank unveiled a comprehensive programme that includes three new products – exciting content partnerships, a dynamic new website and Corporate Social Responsibility (CSR).

Speaking on the programme, FirstBank’s spokesperson, Folake Ani-Mumuney said the partnership with LEGO represents the bank’s quest to create a platform for Nigerian children to express themselves and instilling the culture of financial discipline in them.

She said KidsFirst, the first of the three products to be launched, combines the fun and excitement that children are looking for with the dependability and convenience that parents need. “The partnership with Lego will give KidsFirst account holders access to exclusive Lego events, content and products. As a children’s brand known for both entertainment and educational value, LEGO was the perfect partner for KidsFirst,” she said.

Unity Bank Plc received the Payment Card Industry Data Security Standard certification, the global information security standard that helps prevent card-related fraud, the lender said in a statement.

Presenting the certificate to Unity Bank, Mrs. Adedoyin Odunfa, Managing Director of Digital Jewels, a consulting firm on the project, said Unity Bank – which issues MasterCard and Interswitch Verve cards to its customers – had demonstrated leadership in the industry, being the fifth bank to receive the certification in the country.

Mrs. Odunfa said, “After achieving the ISO270001 last year, Unity Bank has shown that is one of the banks at the forefront of good security and compliance by now attaining the PCIDSS certification. You are the second bank in the country to have attained both of those certifications. That is quite a formidable feat given that there are several other banks who may claim to be more technological advanced than Unity Bank.”

Stanbic IBTC Holdings commemorated the Children’s Day by deploying its senior personnel in various schools across Lagos to teach students the value and benefits of financial planning and a savings culture.

In a statement, the lender said its objective is to assist the gain knowledge skills and confidence that would enable them make responsible financial decisions on how to start saving money for future needs. Among issues discussed during the sessions were developing educational savings plans, budgeting, keeping money safe, and application of mobile money solutions.

The bank said the initiative, which is an integral part of the group’s corporate social investment goals, is focused on helping the students embrace financial planning and a savings culture. Participating schools where the volunteers tutored were Corona School Gbagada, Methodist Girls High school, Yaba, Lagos Progressive Schools, Surulere, Kings College, Lagos, Corona School Ikoyi and Corona School, Victoria Island.

Chief Executive Officer of Stanbic IBTC Holdings, Mrs. Sola David-Borha, said it was in recognition of the strategic role of qualitative education in stimulating socio-economic development that the Standard Bank Group, to which Stanbic IBTC Holdings belongs, focused its corporate social responsibility objectives on three critical areas of societal needs – Education, Healthcare and Economic Empowerment.

Article Credit: The Nation Newspaper

Updated 6 Years ago

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