NIGERIA AGREES CURRENCY SWAP WITH CHINA TO STRENGTHEN NAIRA

Nigeria has agreed a currency swap deal with China, as part of efforts to strengthen the Naira.

The deal is one of the many deals reached following a meeting between Nigerian President Muhammadu Buhari and Chinese President Xi Jinping.
 
President Buhari is currently in China on a working visit.

The presidency says the visit is aimed at securing greater support from Beijing for the development of Nigeria’s infrastructure, especially in the power, roads, railways, aviation, water supply and housing sectors.

Nigeria, which is Africa’s biggest economy is looking for ways to shore up its ailing currency and fund a record budget deficit, possibly by issuing Yuan-denominated bonds in China.

The West African nation is facing its worst economic crisis in decades as sinking oil prices eat into its foreign reserves and the naira weakens against other currencies.

Nigeria has been for months looking for sources to help plug a projected 2016 deficit of 2.2 trillion naira as President Muhammadu Buhari plans to triple capital spending.

During Buhari’s visit to Beijing, the Industrial and Commercial Bank of China Ltd (ICBC), the world’s biggest lender, and Nigeria’s central bank signed a deal on yuan transactions.

“It means that the renminbi (yuan) is free to flow among different banks in Nigeria, and the renminbi has been included in the foreign exchange reserves of Nigeria,” Lin Songtian, director general of the African affairs department of China’s foreign ministry, told reporters.

The move comes after Finance Minister Kemi Adeosun said on Saturday that Nigeria was looking at panda bonds – yuan-denominated bonds sold by overseas entities on the mainland -saying they that would be cheaper than Eurobonds.

Nigeria’s central bank has said it plans to diversify its foreign exchange reserves away from the dollar by switching a stockpile into yuan. It converted up to a tenth of its reserves into yuan five years ago.

Lin said a framework on currency swaps has been agreed with Nigeria, making it easier to settle trade deals in yuan. China has signed currency swap deals with countries ranging from Kazakhstan to Argentina as it promotes wider use of its yuan.

NIGERIAN FOREIGN EXCHANGE RESERVES RISES TO $27.87BILLION

The Central Bank of Nigeria says Nigeria’s foreign exchange reserves rose by 0.18 percent to $27.87 billion by March 29 from a month ago.

According to the CBN, the exchange reserves were $27.82 billion about a month ago.

Calculating about a year ago, CBN data showed that the Reserves stood at $29.79 billion.

Nigeria, which is Africa’s biggest economy, is facing its worst economic crisis in decades.

A plunge in oil prices has eaten into its foreign reserves as it battles to defend its ailing naira currency.

Earlier this year, the CBN said the apex bank is halting dollar sales to non-bank foreign exchange operators and letting commercial banks accept dollar deposits with immediate effect. This was part of efforts to shore up dwindling foreign reserves.

Governor of Central Bank, Godwin Emefiele defended the halt of sale of foreign exchange to bureaux de change saying they were using up the country’s foreign reserves for illegal transactions and selling the dollar way higher than its official central bank rate of 197 naira.

To avoid devaluing the currency, a stance so far supported by President Muhammadu Buhari, the central bank adopted increasingly stringent foreign exchange rules last year and effectively banned dollar access for the purchase of 41 items.

IFEANYI UBAH PROVIDES SOLUTION TO STABILIZE THE NAIRA AGAINST FOREIGN CURRENCIES

Ifeanyi Ubah: Economic and financial intervention for Nigeria (Volume 1)

This Media Guidance Note has become necessary to ensure that the media capture in proper context the views I am expressing on the possibility of stabilizing the Nigerian Naira (NGN / N) against the US Dollar and other international currencies in the Foreign Exchange Market. This has become necessary since my appearance and feature on Channels TV program Sunday Politics of Sunday, February 21, 2016.

SADLY, NAIRA FURTHER DECLINES TO 385 PER DOLLAR

Naira drops further to 385 per dollar

The naira on Wednesday dropped further to N385 per dollar in the parallel market as demand for foreign exchange intensified in the market.

NAIRA FALLS TERRIBLY TO N300 - $1 USD ON THE PARALLEL MARKET

The Nigerian Naira has plummeted to a three-and-a-half low against the US Dollar, to N300 – $1 on the parallel market.

The record slump in value has been attributed to the Nigerian Central Bank’s move to curb the supply of dollars in the country.

Governor of the NCB Godwin Emefiele said foreign reserves stood at around $28 billion compared with $37 billion in June 2014, and that the bureaux de change operators were depleting them at a rate of $28.4 million per week.

“This is a huge hemorrhage on our scarce foreign exchange reserves, and cannot continue,” Emefiele told a news conference in the capital Abuja.

The price of crude oil also recently dropped briefly below the widely watched $30-per-barrel level on Tuesday, extending a selloff that has sliced almost 20% off prices this year amid deepening concerns about fragile Chinese demand and the absence of output restraint.

Ongoing tension between two of the world’s biggest oil suppliers Iran and Saudi Arabia is also likely to mean that the market will remain volatile, which will inevitably lead to a weakened Naira as crude oil production accounts for 78% of Nigeria’s economy.