Naira furthered its gaining streak against the Dollar on Thursday as the parallel segment of the foreign exchange (FX) market continues to react to the $3 billion crude oil repayment loan secured by the Nigerian National Petroleum Company Limited (NNPCL) from Africa Import and Export Bank (AFREXIM) to stabilise the local currency.

Parallel market FX dealers were as at 9.52am on Thursday August 17 seen buying dollar at N835 while selling at N860, according to data by AbokiFX, an online platform that tracks the exchange rate on the parallel market.


Before the news of the AFREXIM loan deal broke on Wednesday, parallel market FX dealers were buying the green back at N880 while selling at N910.

Otega Ogra, senior special assistant to President Bola Tinubu on Digital/New Media explained in a tweet what the $3billion Emergency Crude Repayment Loan from Afrexim is meant to achieve.

“What’s the benefit of this loan to Nigeria? The loan will assist NNPC Limited in settling taxes and royalties in advance. It will also equip the Federal Government with the necessary dollar liquidity to stabilise the Naira, with limited risk,” he said.

“Will this affect fuel prices? A strengthened Naira as a result of this initiative will lead to a reduction in fuel costs. This means that if the Naira appreciates in value, the cost of fuel will drop and further increases will be halted,” Ogra added.

Read also: Tinubu reverts to defending Naira with NNPC’s $3bn AFREXIM loan deal

“What about subsidies? Are they coming back? No. A stronger Naira will result in lower prices from the current level, making subsidies unnecessary. The deregulation policy remains unchanged,” the President’s aide said.

In their recent commentary, Damilare Ojo-led team of research analysts at Lagos-based Meristem said, “In our view, core inflation will remain elevated in the near term in light of the continued free-fall of the Naira. The outlook of the FX market is largely marked by uncertainty and volatility; as such, there is an urgent need for a unified strategy to address these challenges, involving enhancing FX liquidity, promoting export diversity, and fostering investors’ confidence through transparent policies.”

The National Bureau of Statistics (NBS) reported the headline inflation rate for July 2023 to have increased by 129 basis points (bps) to 24.08percent year-on-year (YoY) from 22.79percent YoY in June 2023.


The Meristem analysts noted that the July data also reflects the effect of the petroleum subsidy removal in May and the resultant increase in prices of human and merchandise transportation in the subsequent months.

Before receiving firepower from Afrexim Bank in Cairo to help fight speculators that have ambushed the FX market, the gap between official and the parallel market had widened by about N200 in the past week. It had reached N950/$ at the parallel market before this recent drop.

Tunde Delu, an economist explained that the loan is an attempt to bridge the FX supply gap.

“It is apparent that the short-term panacea/solution to the rising foreign exchange prices is to seek alternative supply avenues. One of the options open to the federal government is to seek such foreign loans directly or through its appointed agencies. The implication would be a positive effect on the supply of FX thereby pushing the price of FX down as the demand-supply gap shrinks,” Delu said.

“To simplify it in the nutshell, we need ‘quick cash’ to cover the demand for forex by all sectors and that has been sourced via the $3billion Crude oil Repayment Loan which enables NNPCL meet its payment obligations,” he added.

Omotayo Akorede Samuel, corporate finance lawyer said that the $3billion Emergency Crude Repayment Loan from Afrexim is standard practice.

“This is standard practice in the Oil and Gas industry Crude oil repayment financing has several benefits for oil companies.”

He said one of the primary benefits is that it allows companies to repay their debts without having to use their cash reserves.

“This can be particularly beneficial for companies that are experiencing financial difficulties or FX issues like Nigeria. Rather than go to the CBN for FX, this $3billion dollar will be used!

“Another benefit of crude oil repayment financing is that the repayment is tied to Crude Oil. Which means that the company can use its cash reserves for other purposes, such as investing in new projects. ‘Crude oil no Dey finish!!!’ You can pay your loan off in 6 months if you want,” Samuel said.

https://businessday.ng/markets/currency-watch/article/naira-gains-further-trades-at-860-on-parallel-market/

Qualifications

Meanwhile:

In the principle of free market, this is not part of deregulation.

If a private limited company is allowed to rig the financial market, this will be an avenue for insider trading.

Security and Exchange Commission should watch out.

Ok

They have started their artificial intervention again. Tomorrow they will claim that subsidy regime is over and they will start bragging that Tinubu's balls are made of steel.

Patch patch economics.


It is no longer market forces.

The funny thing about this is that an oil company NNPC is the one that wants to stabilze naira. CBN will start drilling for oil in Sambisa.

Racoon:
Meanwhile:

Tinubu is on the right track. He met the dollar at close to #780 and is still below #850 as we speak even though there's no more subsidy on oil. On the long run, dollar to naira exchange rate will fall below #200 under Asiwaju.

Asiwaju Jargaban is on the Right Track

Parachoko:
Tinubu is on the right track. He met the dollar at close to #780 and is still below #850 as we speak even though there's no more subsidy on oil. On the long run, dollar to naira exchange rate will fall below #200 under Asiwaju.

Asiwaju Jargaban is on the Right Track

Tinubu met the dollar at N465, that is where Buhari left it, He should bring it back to it previous value.
Stop glorifying nonsense.

we should realy stop focusin on dollar soo much....

their are nations today that are ready to trade without dollars....
nigeria should concentrate on such nations....

india accepts russian rubles for trade....

Spiritmask:


Tinubu met the dollar at N465, that is where Buhari left it, He should bring it back to it previous value.
Stop glorifying nonsense.

You have no knowledge about this discussion you're engaging yourself in. Under Buhari, no bank will sell Dollar to you for #465, infact, Dem go tell you no $ is available and direct you to go and meet Aboki.

Even foreign companies couldn't repatriate their money at this #465/$ you're talking about. The body language from the CBN was that, they should go and get dollar from Aboki.

Emirates pull out from Nigeria because they couldn't change naira to dollar at the rate of #465/$. Is one of the reason Billions of Dollars owned by international companies operating in Nigeria is still Stuck in Nigeria.

Everybody involve in Importing were getting dollar at more than #770. That's one of the reason why cost of Goods and Services haven't Skyrocketed Ridiculously since the Naira was Floated.

Spiritmask:


Tinubu met the dollar at N465, that is where Buhari left it, He should bring it back to it previous value.
Stop glorifying nonsense.

Ignore him

justtoodark:
we should realy stop focusin on dollar soo much....

their are nations today that are ready to trade without dollars....
nigeria should concentrate on such nations....

india accepts russian rubles for trade....

Who would accept naira for trade?

Parachoko:
You have no knowledge about this discussion you're engaging yourself in. Under Buhari, no bank will sell Dollar to you for #465, infact, dem go direct you to go and meet Aboki.

Everybody involve in Importing were getting dollar at more than #770. That's one of the reason why cost of Goods and Services haven't skyrocketed ridiculously since the Naira was Floated.

i dont know for how long america can keep up this strange market behavior....:

The Treasury Department reached its debt ceiling of $31.4 trillion in January 2023

how many nations on earth even have a debt ceiling that reach $1 trillion sef....??

this is bad....

Parachoko:
You have no knowledge about this discussion you're engaging yourself in. Under Buhari, no bank will sell Dollar to you for #465, infact, dem go direct you to go and meet Aboki.

Everybody involve in Importing were getting dollar at more than #770. That's one of the reason why cost of Goods and Services haven't skyrocketed ridiculously since the Naira was Floated.

I don't deal with black market price, which is hard to monitor. I only state and work with official CBN value/price. Buhari left it at N465.

The School fees of my young brother in Canada, has almost double likewise the cost of importing petrol which was at the official rate of N465 during Buhari regime, but now above N750.

He should bring back our previous rate Abeg.

Spiritmask:


I don't deal with black market price, which is hard to monitor. I only state and work with official CBN value/price. Buhari left it at N465.

The School fees of my young brother in Canada, has almost double likewise the cost of importing petrol which was at the official rate of N465 during Buhari regime, but now above N750.

Well, on the street of Nigeria, the official rate was above #760/$ and it was what the market was operating with. It's one of the reason price of goods and services have not increase by more than 100%.

If you can't afford the school fees of your brother in Canada again, let him start hustling in Canada or he should come back to Nigeria.

When Emirate could not repatriate their money base on #465/$, they left Nigeria. Let your bro come back to Nigeria if you can't afford the fees again and he's not ready to hustle in Canada.

Spiritmask:


I don't deal with black market price, which is hard to monitor. I only state and work with official CBN value/price. Buhari left it at N465.

The School fees of my young brother in Canada, has almost double likewise the cost of importing petrol which was at the official rate of N465 during Buhari regime, but now above N750.

He should bring back our previous rate Abeg.

if cbn doesnt have that much dollars to sell at that rate,what do you want them to do....??
you want cbn to buy dollars for you on borrowin from america....

cbn doesnt print dollars....

Ibusho:
Naira furthered its gaining streak against the Dollar on Thursday as the parallel segment of the foreign exchange (FX) market continues to react to the $3 billion crude oil repayment loan secured by the Nigerian National Petroleum Company Limited (NNPCL) from Africa Import and Export Bank (AFREXIM) to stabilise the local currency.

Parallel market FX dealers were as at 9.52am on Thursday August 17 seen buying dollar at N835 while selling at N860, according to data by AbokiFX, an online platform that tracks the exchange rate on the parallel market.


Before the news of the AFREXIM loan deal broke on Wednesday, parallel market FX dealers were buying the green back at N880 while selling at N910.

Otega Ogra, senior special assistant to President Bola Tinubu on Digital/New Media explained in a tweet what the $3billion Emergency Crude Repayment Loan from Afrexim is meant to achieve.

“What’s the benefit of this loan to Nigeria? The loan will assist NNPC Limited in settling taxes and royalties in advance. It will also equip the Federal Government with the necessary dollar liquidity to stabilise the Naira, with limited risk,” he said.

“Will this affect fuel prices? A strengthened Naira as a result of this initiative will lead to a reduction in fuel costs. This means that if the Naira appreciates in value, the cost of fuel will drop and further increases will be halted,” Ogra added.

Read also: Tinubu reverts to defending Naira with NNPC’s $3bn AFREXIM loan deal

“What about subsidies? Are they coming back? No. A stronger Naira will result in lower prices from the current level, making subsidies unnecessary. The deregulation policy remains unchanged,” the President’s aide said.

In their recent commentary, Damilare Ojo-led team of research analysts at Lagos-based Meristem said, “In our view, core inflation will remain elevated in the near term in light of the continued free-fall of the Naira. The outlook of the FX market is largely marked by uncertainty and volatility; as such, there is an urgent need for a unified strategy to address these challenges, involving enhancing FX liquidity, promoting export diversity, and fostering investors’ confidence through transparent policies.”

The National Bureau of Statistics (NBS) reported the headline inflation rate for July 2023 to have increased by 129 basis points (bps) to 24.08percent year-on-year (YoY) from 22.79percent YoY in June 2023.


The Meristem analysts noted that the July data also reflects the effect of the petroleum subsidy removal in May and the resultant increase in prices of human and merchandise transportation in the subsequent months.

Before receiving firepower from Afrexim Bank in Cairo to help fight speculators that have ambushed the FX market, the gap between official and the parallel market had widened by about N200 in the past week. It had reached N950/$ at the parallel market before this recent drop.

Tunde Delu, an economist explained that the loan is an attempt to bridge the FX supply gap.

“It is apparent that the short-term panacea/solution to the rising foreign exchange prices is to seek alternative supply avenues. One of the options open to the federal government is to seek such foreign loans directly or through its appointed agencies. The implication would be a positive effect on the supply of FX thereby pushing the price of FX down as the demand-supply gap shrinks,” Delu said.

“To simplify it in the nutshell, we need ‘quick cash’ to cover the demand for forex by all sectors and that has been sourced via the $3billion Crude oil Repayment Loan which enables NNPCL meet its payment obligations,” he added.

Omotayo Akorede Samuel, corporate finance lawyer said that the $3billion Emergency Crude Repayment Loan from Afrexim is standard practice.

“This is standard practice in the Oil and Gas industry Crude oil repayment financing has several benefits for oil companies.”

He said one of the primary benefits is that it allows companies to repay their debts without having to use their cash reserves.

“This can be particularly beneficial for companies that are experiencing financial difficulties or FX issues like Nigeria. Rather than go to the CBN for FX, this $3billion dollar will be used!

“Another benefit of crude oil repayment financing is that the repayment is tied to Crude Oil. Which means that the company can use its cash reserves for other purposes, such as investing in new projects. ‘Crude oil no Dey finish!!!’ You can pay your loan off in 6 months if you want,” Samuel said.

https://businessday.ng/markets/currency-watch/article/naira-gains-further-trades-at-860-on-parallel-market/

Still too high !!!

GeneralDae:

Who would accept naira for trade?

we can try to make bilateral deals with the poorest nations on earth....
nigeria still has things other poor nations need....

couple the naira with nigerian products....

justtoodark:


we can try to make bilateral deals with the poorest nations on earth....
nigeria still has things other poor nations need....

couple the naira with nigerian products....

What would those poor nations offer us? What do they export that we need and why do you think those poor nations would reject dollars and accept our deal instead?

Slow and steady

helinues:
Slow and steady

Wins The Race

GeneralDae:

What would those poor nations offer us? What do they export that we need and why do you think those poor nations would reject dollars and accept our deal instead?

dont be ignorant....
you are poor yourself too....

and dont forget,nigeria has a hugh shippin fleet for a african country....
borderin many poor african nations....

Na wah.

Without doubt, this government continues the business of leaving the substance and chasing the shadow.

All the jargons are to confuse the blind followers. How has government borrowed further the sum of $3b in the name of stabilizing the naira, and not showing the way forward beyond that?

What has happened to the oil thieves?
What has happened to the refineries?
What has happened to the subsidy thieves?
What has happened to those who use round tripping as their livelihood?
What has happened to economic sabotage?
Where are all those who have been raping the country economically?

They know that the borrowed amount will find its way mostly to the accounts of the black market operators. What has happened to black market operators in terms of financial prosecution?

This country just suffers because a few people choose to make the entire population suffer. It suffers because the poor who are badly impacted, still support their crooked leaders.

its good we are discussin only business on this thread and nothing about going to war with niger republic....
not good for business....

MadamExcellency:
In the principle of free market, this is not part of deregulation.

If a private limited company is allowed to rig the financial market, this will be an avenue for insider trading.

Security and Exchange Commission should watch out.

This move is going to be counterproductive.

When they hurriedly removed subsidy, a few of us tried to create awareness about the repercusions and we were rebuffed.

When they came up some days later with the dollar/naira liberalisation policy, again we vehemently put out words as to the attendant side effects, we were called enemies of the country.

Now the NNPC has gone to borrow 3billion dollars from AFREXIM bank in a desperate effort to help mitigate the woes occasioned by the first two policies, a move which is certainly going to backfire in about a month, and we're still here, trying to make Nigerians of Yoruba descent to see beyond their noses, and as always, we're wailing against their Son cause he's President.

If there's one thing the last three months have shown, it is the fact that the average Yoruba Lagosian is a "stupid suffer-head". These people have been so brainwashed to believe that life has to be built around stress and suffer because they've basically lived their entire adult lives being ruled by Tinubu and he has made sure that a deprived and difficult life has been imprinted into the mindset of an average Yoruba living in Lagos.

Most of them are even so sadly unexposed that they have no idea what life looks like outside Lagos, Ibadan, Abeokuta and Osogbo. Reason you'll find them all on nairaland defending even policies that are clearly impoverishing them.. .

BoldBrainz:


This move is going to be counterproductive.

When they hurriedly removed subsidy, a few of us tried to create awareness about the repercusions and we were rebuffed.

When they came up some days later with the dollar/naira liberalisation policy, again we vehemently put out words as to the attendant side effects, we were called enemies of the country.

Now the NNPC has gone to borrow 3billion dollars from AFREXIM bank in a desperate effort to help mitigate the woes occasioned by the first two policies, a move which is certainly going to backfire in about a month, and we're still here, trying to make Nigerians of Yoruba descent to see beyond their noses, and as always, we're wailing against their Son cause his President.

If there's one thing the last three months have shown, it is the fact that the average Yoruba Lagosian is a "stupid suffer-head". These people have been so brainwashed to believe that life has to be built around stress and suffer because they've basically lived their entire adult lives being ruled by Tinubu and he has made sure that a deprived and difficult life has been imprinted into the mindset of an average Yoruba living in Lagos.

Most of them are even so sadly unexposed that they have no idea what life looks like outside Lagos, Ibadan, Abeokuta and Osogbo. Reason you'll find them all on nairaland defending even policies that are clearly impoverishing them.. .

tinubu is the president accordin to majority votes....
we cant risk anarchy because any of us or groups dont like it....

guy,dont try it....we are not used to anything else than majority votes no more,no matter how its achieved....

justtoodark:


dont be ignorant....
you are poor yourself too....

and dont forget,nigeria has a hugh shippin fleet for a african country....
borderin many poor african nations....

So you had no answer to the question.

GeneralDae:

So you had no answer to the question.

you only want to make trade with rich nations then....
and if a rich person says he will fvck you in the arse for dollars,you agree to that too....??

NNPC should keep borrowing USD to buffer the naira until it drops to #500 to a dollar. Maybe I go come japa that time.

Then, they will later explain to us the difference between floating the naira and what this government is doing.

This is clearly a policy summersault that will keep plunging Nigeria into more debt than Buhari left her.

justtoodark:


you only want to make trade with rich nations then....
and if a rich person says he will fvck you in the arse for dollars,you agree to that too....??

Okay let me rephrase my question for you:

What can we import from a poor country that they would be willing to ignore the dollars for?