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Business: Naira Rebounds As Banks Offload Excess Dollars

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Deposit Money Banks on Thursday made frantic efforts to offload their surplus dollar stocks ahead of the midnight February 1, 2024 deadline given by the Central Bank of Nigeria (CBN) to commercial banks to sell all excess foreign exchange holdings.

It was gathered that the treasury departments of the DMBs spent the entire day battling to sell their excess FX holdings. Officials processed several foreign exchange request forms of their customers as they sold more dollars to them.

The increase in the level of forex sale activities at the official foreign exchange market, it was learnt, led to the rebound of the naira at the parallel market on Thursday.

According to The Punch, several top bank executives under anonymity confirmed there were huge forex transactions in the banks.

As of 6pm on Thursday, bank officials especially those of the treasury departments, were making efforts to meet the new prudential requirements of the regulator.

Amid its fresh moves to stabilise the nation’s volatile exchange rate, the CBN had in a circular released on Wednesday, ordered DMBs to sell their excess dollar stocks latest February 1, 2024. The CBN also warned lenders against hoarding excess foreign currencies for profit.

According to officials, the central bank believes some commercial banks hold long-term foreign exchange positions to enable them to profit from the volatile movements of exchange rates.

The new circular introduced a set of guidelines aimed at reducing the risks associated with these practices.

In the circular titled, “Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks”, the CBN raised concerns over the growing trend of banks holding large foreign currency positions.

The circular read in parts, “The Central Bank of Nigeria has noted with concern the growth in foreign currency exposures of banks through their Net Open Position (NOP). This has created an incentive for banks to hold excess long foreign currency positions, which exposes banks to foreign exchange and other risks.”

The apex bank further directed banks with current NOPs exceeding its limits to adjust their positions and comply with the new regulations by February 1, 2024.

The latest circular came barely 48 hours after the CBN released a circular, warning banks and FX dealers against reporting false exchange rates, among others.

The new development came  on the heels of the adjustment of the methodology used for the calculation of the nation’s official exchange rate by the FMDQ Exchange, a situation that has moved the official exchange to about N1,500 from around N900/dollar.

Following the latest CBN directive which is aimed at unifying the official and parallel market rates of the local unit, several banks sold forex to their customers on Thursday.

The development led to a sharp rebound of the national currency in the official market. Bureau De Change operators in Lagos, Kano, and Abuja also pushed to sell their dollar holding amid fear the local unit might sustain the gain in coming days.

Alhaji Lawan Ismael, a BDC operator in Ikeja, Lagos, said he bought and sold the greenback for N1400/dollar and N1420/dollar, respectively.

Another BDC at the Lagos airport, Sabiu Abdullahi, said the greenback went for between N1400/$ and N1400/$. This, he said, was a huge rebound from over N1500/$ it sold on Wednesday.

In Abuja, the naira traded at the parallel market between N1,300/$ and N1,350/$.

A Bureau De Change (BDC) operator, Ibrahim Yahu told The PUNCH, “Today, because of our small action, you could not get a standard price. Those who bought today did so at risk. But the dollar sold between N1,300 and N1,350.”

The naira closed at N1,455.59/$ at the official window on Wednesday, according to the FMDQ Securities Exchange. This rate has been yet to be updated as of 09:39 pm Thursday.

Commenting on the effect of the circular, bank officials who pleaded anonymity said they were bound to ensure their books remain within the new FX prudential limit.

“All banks working to meet the deadline,” the chief financial officer of a tier-2 bank told said on Thursday evening.

Also, a top official of a tier-1 bank, while commenting on the development, said, “After the CBN directive, we had to push out the FX.”

Another official said, “All banks are pushing out funds now, and we are ready to sell. The key thing is profit here.”

Meanwhile, some bank officials said beyond the FX in banks, the CBN and the security agencies would need to beam their searchlights on politicians and government officials who are hoarding dollars in their homes.

As part of its effort to boost liquidity in the FX market, the CBN on Wednesday issued a new circular that removes the previous cap on exchange rates quoted by International Money Transfer Operators.

In a document titled, ‘Guidelines on International Money Transfer Service in Nigeria,’ the CBN asked IMTOs to make payments to customers only in Nigerian currency while using the prevailing exchange rate on the day the transfer is received.

BIG STORY

Power Generation Increased By 34% In 2024 — Power Minister Adelabu

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Adebayo Adelabu, the Minister of Power, announced that Nigeria’s power generation increased by 34% in 2024. Speaking during a budget defense session with the Senate Committee on Power, Adelabu revealed that the administration inherited an average generation capacity of 4,100 megawatts (MW) in 2023 and raised it to 5,528 MW by the end of 2024.

He attributed the increase to the addition of a new 700 MW hydroelectric power dam, Zungeru, and significant improvements from existing power plants, both hydro and thermal. Although the initial target was 6,000 MW, unforeseen challenges such as grid disturbances prevented this achievement. However, the shortfall was minimal.

Adelabu also highlighted a rise in energy access, from 59% in 2023 to 64% in 2024, driven by a combination of grid access expansion and growth in renewable energy initiatives, including solar, small hydro, and wind projects. Despite these advancements, he expressed concerns over the metering gap, with around six million customers metered and over seven million remaining unmetered. To address this, Adelabu mentioned that the ministry had secured a N700 billion fund and planned to procure at least two million meters annually over the next five years, aiming to eliminate the metering gap and fraud in electricity billing.

  • Shiroro-Kaduna-Mando Line Yet to Be Fixed Due to Insecurity

Adelabu also addressed the ongoing issue of the Shiroro-Kaduna-Mando transmission line, which has not been repaired due to persistent insecurity in the region. This line is one of two major power transmission routes to northern Nigeria, and its failure has placed significant pressure on the grid. The minister explained that attempts to repair the line were hindered by terrorist and bandit attacks, forcing the government to hand over the issue to security agencies.

Adelabu acknowledged that the national grid inherited by the government was “very old and dilapidated,” which contributed to eight collapses in 2024, five of which were full collapses. He emphasized that efforts were ongoing to address these challenges, with the Presidential Power Initiative aiming to revamp the grid and eliminate vandalism.

The minister expressed hope that 2025 would bring improvements, stating that despite the setbacks, the government had almost met its targets for 2024.

In response, Eyinnaya Abaribe, chairman of the Senate Committee on Power, questioned the government’s continuous funding of power distribution companies (DisCos).

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BIG STORY

Those Who Collected Money For Alaafin Stool Will Be Prosecuted — Governor Makinde

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Seyi Makinde, the governor of Oyo State, has stated that individuals who received bribes during the selection of the Alaafin of Oyo designate will be prosecuted.

Makinde made this remark on Monday while presenting the staff of office to Abimbola Owoade, the new Alaafin of Oyo, at the Oyo State Government House in Ibadan.

Despite opposition from a five-member faction of the Oyomesi (kingmakers), who preferred Lukman Gbadegesin, Makinde announced Owoade as the Alaafin-designate on Friday.

In July 2024, two members of the Oyomesi informed the Economic and Financial Crimes Commission (EFCC) that Gbadegesin had offered each of the five kingmakers N15 million during the selection process.

While handing over the instruments of office to the monarch, Makinde reiterated that the Alaafin stool would not be for sale during his tenure.

He further emphasized that those who attempted to destabilize the traditional institution in the state would be prosecuted.

“The government is not letting down. We will prosecute them. The money they collected, they will still be prosecuted,” the governor stated.

“Except they go to Kabiyesi and apologise; if he forgives them, then I will also forgive them.”

The governor also clarified that there were no political motives behind his approval of Owoade as Alaafin.

He mentioned that he had neither spoken with Owoade nor met him or any of the other princes competing for the throne.

This approach, he said, allowed him to remain objective in his decision-making.

“Some people said maybe it was political consideration. No. Politics, electioneering is a game,” he stated.

“It’s only when you have been elected that governance becomes a serious business because you will take decisions that will affect millions of people. So, we will not play politics with governance.”

Makinde further explained that in 2019, his administration faced challenges with the traditional institution in Ibadanland, which have since been resolved to everyone’s satisfaction.

Regarding the Alaafin stool vacancy in 2022, he mentioned, “We were moving towards the election, and people said, ‘you have to approve the appointment of Alaafin; otherwise, Oyo people would not vote for you.’”

He added, “I said, ‘the people should not vote for me, but that I would do what was right,’ and Oyo voted for me massively. And Oyo will still continue to vote for me.”

The governor confirmed that the coronation would take place in four weeks, adding, “on that day, I’ll talk.”

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BIG STORY

UPDATE: Why We Sacked Obasa, Replaced Him — Lagos Lawmakers [VIDEO]

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Lawmakers in the Lagos State House of Assembly have revealed why they sacked Mudashiru Obasa as their Speaker on Monday.

The lawmakers spoke after the plenary on Monday during which they also elected Hon. Mojisola Meranda as Obasa’s replacement.

The representative of Epe 1 Constituency, Abiodun Tobun, who spoke on behalf of his colleagues, said: “The Lagos State House of Assembly declared its decision to impeach Speaker Mudashiru Obasa.

“The impeachment was a unanimous decision by the lawmakers.

“The lawmakers agreed to take this step to safeguard our image and Lagos State.

“Change is inevitable, and we felt it was time for a new direction.

“All standing committees and principal office positions have been dissolved.

“We are determined to work together to elevate the Assembly and deliver on our responsibilities to Lagosians.”

Tobun then went on to explain in detail the reason for their decision.

 

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